Often times we get asked if there is anything a client can do to help their insurance costs. When it comes to workers’ compensation insurance, there is. This is where your Experience Modification Rating (E-Mod) comes into play. Your Experience Modification is a numerical rating that represents your claims history and the rate at which your annual premium will be adjusted. Most companies will have an E-Mod – a new business will not have an E-Mod for the first three years and some very small businesses may never qualify in some states. Because this rating affects the overall premiums number, it also provides incentive for organizations to implement loss prevention and employee training programs.
Your Experience Modification Rating is based on your past claims history and depending on the severity and frequency of your claims you may get credits or additional premium when it comes to your insurance premium. The fewer claims you have, your Experience Modification Rating will go down resulting in credits. The more claims you have, the higher your Experience Modification Rating will go resulting in additional premium. For example, let us look at a policy with an annual premium of $10,000. If your Experience Modification Rating is 0.9, then you would get $1,000 off your premium. However, if your Experience Modification Rating if 1.1, you would end up paying an additional $1,000.
Your Experience Modification Rating is calculated on an annual basis and has a 3-year tail. This means that you will not see the impact of a recent claim immediately and that any claims will influence your rating for 2-3 years following the incident. This claim history is then used in comparison to employers who are within the same classification as you to get your resulting Experience Modification Rating. In simple terms, an Experience Modification Rating compares actual losses to expected losses. This is why it can be helpful to create a culture of safety as it can save you money and keep employees safe.
Creating a culture of safety can be vital in helping to control your Experience Modification Rating. It is important to offer safety training and personal protective equipment to employees. It is best to keep a record of any trainings an employee has partaken in and have them sign off on it, acknowledging that they took and understood the training. A formal program is also a great idea and is something the DFA Insurance and Loss Control teams can help implement.
DFA Insurance offers loss control and safety training programs to our members in an effort to reduce or eliminate the potential for injuries or fatalities on farms by controlling existing or emerging workplace hazards. We have trained staff on hand to help your operation get started with a safety program or to modify an existing program.
When it comes to worker’s compensation insurance, you have the power. You have the ability to help set the costs and make your business a safer place to be. By implementing safety programs and training, you can lower the number of claims on your records, and potentially better your Experience Modification Rating. Give us a call at 877-358-9523 and get the conversation started!