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Experience ModifiersWhat They Are and
Why There’s Nothing Wrong with a 1.0
Eric Bourquin, Vice President of Safety ServicesTexas Mutual Insurance Company
Understanding Experience Rating
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Experience rating and modifiers
Understanding
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Experience rating and modifiers
Experience rating formula
Understanding
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Experience rating and modifiers
Experience rating formula
Ways to control your experience modifier
Understanding
What is the purpose?Comparative analysis:• Used to modify premium• Based on individual account experience
Creates incentive to promote health and safety:• Reduce number of losses through safety• Encourage savings through return to work
programs
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What is experience rating?
It is a formula that:Evaluates your claim experience, adjusted for the amount of payroll you have in each class codeCompares your company’s claim experience to expected claim experience within your industryResults in an experience modifier
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Compares an employer’s actual losses against the expected losses within their industry
Experience modifier
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An experience modifier is a factor used in premium
calculation.
It is calculated based on your claim experience
during the last 3 completed policy years.
3 Years for experience rating
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2018-192014-15 2015-16 2016-17 2017-18
Used to calculate for new period
New
Used to calculate the current
Current 2013-14
How is the experience rating calculated?
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The formula in simple terms:
= E-ModActual LossesExpected Losses
What does this mean for you?
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A multiplier of 1.00 represents an average risk
Standard Premium
Experience Modification Factor
Modified Premium
$50,000 X 1.00 = $50,000
What does this mean for you?
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A multiplier of 1.00 represents an average riskA multiplier less than 1.00 – called a credit mod
Standard Premium
Experience Modification Factor
Modified Premium
$50,000 X 1.00 = $50,000$50,000 X 0.80 = $40,000
What does this mean for you?
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A multiplier of 1.00 represents an average riskA multiplier less than 1.00 – called a credit modA multiplier greater than 1.00 – called a debit mod
Experience Modification Factor
Modified Premium
$50,000 X 1.00 = $50,000$50,000 X 0.80 = $40,000$50,000 X 1.20 = $60,000
Risk Information
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Risk Information
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Final Emod Factor
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Controlling your experience rating
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Prevent accidents
and injuries
Controlling your experience rating
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Contain claimcosts
Prevent accidents and injuries
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• Develop and implement an Injury & Illness Prevention Program
• Train employees on safety topics• Investigate accidents & near misses
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Management commitment Analysis Record-
keeping
Safety & health training
Audit/ inspection
Injury and Illness Prevention Program
Accident investigation
New employee orientation
Refresher training
Remedial training
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Injury and Illness Prevention Program
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Prevent accidents & injuries:Training resources
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Prevent accidents & injuries:Accident investigations
• Gather facts• Analyze information
to determine root cause
• Develop corrective actions
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Containing claim costs
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Containing claim costs
Report claims to your carrier immediately
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Containing claim costs
Report claims to your carrier immediately
Implement a return to work
program
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Containing claim costs
Report claims to your carrier immediately
Implement a return to work
program
Communicate proactively with
all involved parties
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Containing claim costs
Report claims to your carrier immediately
Will allow the carrier to:• Arrange for appropriate
medical treatment• Prevent payment delays• Refer claims for
investigation as needed
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Containing claim costs
Implement a return to work
program
Before an injury:• Develop policies and
train employees• Assess job tasks• Prepare documents
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Containing claim costs
Implement a return to work
program
After an injury:• Send documents to
the doctor• Discuss RTW
opportunities• Make RTW offer
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Containing claim costs
Communicate proactively with
all involved parties
• Stay in contact with the claim adjuster
• Stay in contact with the treating physician
• Stay in contact with the injured employee
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SummaryExperience modifiers are:• Based on comparative experience• A part of premium calculation• A reflection of loss experience
You can manage your experience modifier through:• Effective safety programs• Return to work options• Communication
Questions?
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