When it comes to calculating premiums for workers’ compensation insurance, the criteria involved are not always straightforward. One of the factors that are part of the equation is called an Experience Modification Rating. It is a multiplier that typically takes your claims history over the past three years into account. The mod rate can have a significant effect on how much more (or less) a company pays for workers’ comp coverage.
The rate starts at a baseline 1.0 and is adjusted from there. An above-average amount of claims over the time period can shift this value upwards. Typically, a business is compared to other companies with similar classifications to determine if the amount of cases is excessive or not.
Steps To Reduce Mod Rate
Since more claims result in a higher mod rate, then the opposite is also true. Fewer claims over time can reduce the rate – resulting in lower insurance premiums. There are several corrective and preventive ways to accomplish this:
- Develop and promote safety and training programs.
- Investigate accidents and learn how to prevent them from happening again.
- Search for ways to improve ergonomics and fatigue-related injuries.
Workers’ compensation insurance can be a large expense for employers. Understanding the modification rate is essential for understanding how to reduce those costs.