An Experience Modification Rate (EMR or MOD) has a significant impact on the worker's compensation insurance premium of a business. The MOD is a metric that insurers use to calculate worker's compensation premiums; it takes into account the number of claims/injuries a company has had in the past and their corresponding costs. This rate directly affects your bottom line: the higher your risk rate, the more money you pay for worker's comp insurance. Stirling will help you understand your rate, how it impacts your premium spend and how to improve it.
Your Risk Profile is a measure of expected losses for a finite time period based on various items of historical data such as total losses, number of losses, average loss size, and payout patterns. More importantly it is how your company is presented to the underwriter when your broker markets it to the insurance carriers. Our Program/MOD assessment identifies which losses affect your current rating. This data helps us understand your profile from the broker, carrier/underwriter and company perspectives giving us the insight to develop specialized loss control solutions and improve your profile.
Each individual employer has their own primary threshold that is determined by the class of business they operate and the amount of field payroll they accrue over a three year period
The primary threshold is the point at which any claim maximizes its negative impact on the MOD. You must be sensitive to this number because any open claim with paid amounts under the threshold, provides an opportunity to save points to the MOD. Once a claim exceeds paid amounts over your threshold, it no longer can negatively impact your MOD. However, you would still want to monitor and manage these claims to ensure your injured employee is being provided attentive care and to maintain knowledge of your loss experience.
Knowing your primary threshold is the most important piece of information when managing your XMOD.
You’re a sub-contractor and your primary threshold is $33,000. The most any claim can affect your MOD is $33,000 and the most points that any claim can add to your MOD is 13.
You have a claim open for $40,000 with paid amounts of $10,000 and reserved amounts of $30,000.
This claim will go into the calculation at $40,000 (Paid + Reserved) but because the total amount succeeds the primary threshold of $33,000, it will only show up on the rating sheet totaling $33,000 of primary loss and contribute 13 points to your MOD.
It would behoove you to analyze and monitor this open claim, because it has paid out amounts well below your primary threshold of $33,000.
If this same claim closes for a total paid amount of $22,000, the closed claim would go into your MOD at $22,000 with 8 points contributing to the MOD.
The difference between a $40,000 claim and a $22,000 claim is 5 points to your MOD, or, 5% to your premium!
Our streamlined processes allow us to introduce cost reduction efficiencies, analyze large sums of data and proactively address, monitor and react to changes in the competitive landscape. Applying risk strategies improves your profile & MOD resulting in a positive underwriter engagement & a strong negotiation.
Lastly, Stirling does not share quoted premium information with other competing insurers. Thus, you are assured that each carrier’s quotation was arrived at independently using the underwriting data you provided, and without our firm favoring one carrier over another.
We also do not take contingencies from the insurance companies. We work for you and only you.