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Work Comp Wednesdays – Do You Know Your Lowest Possible Experience Mod?

Welcome to Work Comp Wednesdays! Insurance People is the industry-leader in North Carolina workers’ compensation insurance. Each week, our team takes a frequently asked question and expands on the issue for our clients, prospective clients, and community members to better understand the confusing nature of Work Comp.

What is a minimum experience mod? What is my organization’s min mod? How do I get to my minimum mod?

Experience Mod

Your Experience Modification Factor is an important part of determining how much you’ll ultimately pay for your Workers’ Compensation Insurance. The final number evaluates you against peers in your industry – whether that is manufacturing, construction, or pest control companies.

The Power of Peer Evaluation

A Mod of 1.00 indicates that you’re on a level playing field with your peers as it relates to your Work Comp claims and payroll ratios. If your Mod is below a 1.00, you’re considered best-in-class. And if your Mod is over a 1.00, then your claims were more severe than your industry peers and it’s going to cost you in the long run. But what is your lowest possible mod and why is it important?

ROI of Your Work Comp Program

If you decide to invest the time and resources to achieve your lowest possible Mod, then you not only have the opportunity to save your company premium dollars, but also the “indirect costs” associated with each Work Comp claim.  According to OSHA, your return on investment (ROI) is more than 2 to 3 times on average of what is spent on your loss control efforts. In fact, more than 60% of CFO’s reported that every $1 invested in injury prevention returned $2 or more, and over 40% said that productivity was the greatest benefit of an effective workplace safety program.

Long-Term Profitability of Workplace Safety

Your workplace safety program’s financial return on investment (ROI) is revealed through increased productivity, savings from fewer injuries and lower Workers’ Compensation costs – though these savings may take time to realize.  The Experience Mod that adjusts your Workers’ Compensation premium up or down may take up to three years to fully realize, but the other costs of safety (both direct and indirect) would accrue immediately – every time a process is improved or an accident or injury is prevented.

Both direct and indirect costs of workplace injuries are important to evaluate for your business and the impact it has on your bottom line. Choosing to implement safety and loss control programs are proven to have a long-term savings impact.