The Story Your Experience Modification Reveals

For many employers, workers’ compensation insurance is all about one number—the premium quoted. Understandably, employers want to pay the lowest amount possible on this mandatory coverage. While some brokers try to compete on a low bid, those who do miss the chance to educate employers on how their mod affects their premium, and how lowering their mod through targeted improvements in safety, hiring, return to work and other areas will ultimately improve both their direct and indirect workers’ compensation costs.

There’s much more to workers’ compensation than price. Let us show you how an analysis of your mod can identify problem areas in your operations and ultimately lead to cost savings.

What does your mod reveal?

While the mod itself is a single number, an analysis of how your payroll and loss data functions in the experience rating formula can provide valuable insight.

Mod calculation varies by state but generally depends on these components:

  1. Actual losses from the three prior policy periods, not including the most recent policy period
  2. Expected losses based on payroll and expected loss rates for the industry
  3. The amount of each loss, i.e., its severity
  4. Whether the loss is medical-only, without temporary or permanent disability
  5. Ballast and weighting values published by the National Council on Compensation Insurance (NCCI)

Generally, the mod is calculated using loss and payroll data from a three-year experience rating period. For example, for a mod factor calculated on Jan. 1, 2015, data would be used for the Jan. 1, 2011-2012, Jan. 1, 2012-2013 and Jan. 1, 2013-2014 policy periods. The data for the previous year (in this case, Jan. 1, 2014-2015) would be excluded.

Most employers realize their mod affects premiums in some way, but they rarely connect the dots and realize what actions they can take to lower their mod and insurance costs. That’s where we come in. We can introduce cost-cutting concepts you may have never heard before and put workers’ compensation insurance in a new light.

How we show our value

The mod is complex, but when you are able to use analytics to show what effect the mod has on your business, you will gain an edge over your competitors and ultimately save a lot of money.

We’ll start the analysis by showing you how low your mod (and associated premium) can be. Your “loss-free” mod—what the mod would be if there were no losses at all—is a number unique to your organization, an attainable goal and something you should be shooting for.

You may wonder what your competitors pay for workers’ compensation coverage. To answer that question, look at the “expected” losses portion on the mod worksheet. This column reflects the average losses for a company with a similar payroll. How do you stack up?

If you have many losses, even if they are minor, those losses will impact the mod more than if there were fewer severe losses. This problem often points to some sort of safety training or cultural issue that needs to be addressed. We’ll show you your frequency ratio—1.0 or higher needs attention.

We’ll also examine whether you have a severity issue, or a problem with not keeping losses medical-only. This almost always points to an opportunity for cost savings and often the need to establish or improve a return to work program. Losing manpower from injuries on the job directly affects your business’ earning power and bottom line.

Mod analysis will reveal problem areas, but fear not—we can deliver solutions. We will outline a clear strategy to help lower the most costly losses or target problem areas, whether they’re associated with a certain type of injury, body part, company location or other data.

What if you were to reduce your losses by 25 percent? Fifty percent? Even more? We can run the numbers to show you real long-term savings and exactly how you can attain them.

We can help tell your story

With the help of analysis, your mod tells a story—about where your business has been and what it can do to improve. With the power of our team, utilizing a leading software tool, we’ll analyze your mod and tell your story. Specifically, we can do the following:

  • Calculate and project costs associated with the mod.
  • Identify opportunities for improvement.
  • Analyze what each specific loss costs you in terms of mod points and premium.
  • Reveal cost drivers and the impact of the mod.
  • Focus on problem areas, such as frequency or severity of injuries.
  • Examine loss trends for types of injuries, departments and more.
  • Isolate areas to target with loss control and risk management strategies.

By partnering with Tooher Ferraris Insurance Group, and experiencing Risk Synergy you can better understand factors contributing to your present experience modification and come up with a strategic plan to mitigate future costs. Call Tooher Ferraris Insurance Group today to learn more and get started!

Waivers of Subrogation

The regular review of every contract you sign is a highly important risk management task. This includes a contract’s waiver of subrogation clause.

Subrogation is a basic insurance concept used in insurance contracts. If a loss occurs, it typically happens through someone’s negligence. In general, the negligent or “at fault” party is liable for the cost of the loss; your insurance carrier can then choose to sue the at-fault party to recover the amount of a claim they paid for you in a process known as subrogation. You may not find the term subrogation in your contract, but it may be included—check for the terminology ”Transfer of Rights of Recovery Against Others to Us,” which some insurance policies use in place of subrogation.

When a waiver of subrogation is required in a contract, it means that you are waiving your insurance company’s right to subrogate against another party, most commonly the party you are in under contract with. Most policy contracts, with the exception of workers’ compensation, allow you to waive your rights of subrogation as long as it is done in writing and prior to the loss. Often an endorsement is added specifically referring to the exact contract as a means of clarification. However, there are associated risks:

  • In some jurisdictions, waivers of subrogation are not available. Therefore, a careful review of the state statute is required.  You should also obtain your workers’ compensation carrier’s position and agreement on waivers of subrogation.
  • Waiver of subrogation requirements should be built into a contract. The contract wording should be thoroughly reviewed to ensure the waiver of subrogation is being utilized appropriately for the situation. For example, mutual waivers may be beneficial in landlord/tenant contracts, where all parties waive their rights. However, in construction contracts, mutual waivers may not be acceptable or prudent.

The Value of Waiver of Subrogation Clauses

A waiver of subrogation clause is placed in a contract to minimize lawsuits and claims between the parties. The risk, once assigned to the insurers by the parties, is determined to stop there, without allowing the insurer to seek costs from a third party. This guarantees that if a loss occurs, the owner’s insurer pays the claim and the insurance proceeds can be used to fund the cost of repairs without determining who was at fault. Without a waiver of subrogation, litigation or arbitration is frequently needed to determine whose fault caused a loss, which can lead to long and costly delays.

Reviewing Contracts

It’s important that all contractual language mirrors your policy. As your insurance partner, we are committed to helping you understand how your policy language impacts your contractual risks. Call Tooher-Ferraris Insurance Group today to learn more about how we can assist you in mitigating your contract exposure.

Workers Compensation Insights

The Important of Prompt Claims Reporting

The rising cost of claims presents a significant challenge for employers today. However, there is a simple strategy that can significantly reduce your claims costs: report all claims promptly.

In fact, the sooner a claim is reported, the lower the cost is likely to be. Beyond cost, reporting claims promptly can help avoid unnecessary conflict with insurance companies, ensure a proper investigation, preserve employee morale and maintain compliance.

Minimize Cost

It’s no secret that delayed reporting of claims can add up to unnecessary costs for employers. Studies show that the longer it takes to report a claim, the higher the cost tends to be. For example, the National Council on Compensation Insurance (NCCI) conducted a survey and found that claims costs began to climb significantly after a lag time of just seven days. A reporting lag of 29 days or more after the incident resulted in costs that were 49 percent higher than costs of claims reported within a week.

In addition, by promptly reporting claims, day-to-day operations will be able to return to business as usual much faster, which can also save your company money associated with lost productivity.

Reduce Friction with Insurer

Many policies have reporting requirements, so it is possible that a late claim could void your coverage altogether. When your company delays reporting a claim, the process is much more difficult for a claims adjuster – making it less likely that your company will receive the most advantageous settlement or outcome.

It is also important that the insurer is able to conduct a thorough investigation as soon as possible after the incident. When reporting is delayed, the investigation can be much less conclusive due to faded memories and unpreserved evidence.

Preserve Employee Morale

Certain incidents can be upsetting for employees, and it is important for your company to demonstrate that you take the matter very seriously and care about your employees. Promptly reporting any claim can go a long way toward preserving employee morale and trust in your company.

Maintain Compliance

There are certain types of incidents that need to be reported not only to the insurer, but also to the Occupational Safety and Health Administration (OSHA). When a recordable work-related illness or injury occurs, the employer has seven calendar days to record it on their OSHA log, Form 300.

Contact Tooher Ferraris Insurance Group at 203-834-5900 to assist you in establishing effective claims reporting procedures so you can reduce lag time and protect your bottom line.