The workers’ compensation is completely dependent on numbers that include payroll, premiums, rates, and mod or “Experience Modification Factor” or “mod” in short. The mod is a mathematical factor that represents the company’s workers’ compensation claim experience in relation to other companies in the same industry. The mod factor represents credit or debit that gets added to the workers’ compensation premium.
Technically speaking, the mod factor greater than 1.0 is considered credit mod, which in simple terms means that your losses are greater than expected and a surcharge gets added to the premium. On the other hand, a mod factor lesser than 1.0 is deemed credit mod which means the losses are lesser than expected and there would be a discount on the insurance premium.
Most companies are not known to pay attention to mod and what impacts the calculation of these values. This blog is an attempt to make readers understand what cannot be done pragmatically to reduce and improve the mod factor. Here we shall enlist ways in which the mod factor can be improved to reduce claims among company workers. Here it is:
Inaccurate or Incomplete Data: Most often the mod gets calculated based on payroll and loss data that gets submitted by the insurers to the rating bureau. In some cases, companies tend to submit inaccurate or incomplete data that can lead to the calculation of incorrect mod. It is prudent for companies to get this mod worksheet and review the loss and payroll data for accuracy.
Formation of Safety Committee: A company that comes with hazards in the workplace must create a safety committee that follows a safety program with strict enforcement. The management must be active in setting performance goals for supervisors and managers. And workers on the floor must be incentivized with rewards when there are no injuries or time lost on account of injuries.
Employee Training: Each employee on the shop floor must be exposed to training on a mandatory basis while making safety a priority in the work premises. All employees must be communicated compliance requirements and prevailing safety standards along with regular communication of the importance of safety at the workplace.
Workplace Hygiene: As far as possible, workers must be encouraged to keep the workplace neat and tidy. They must be communicated about the need for safety checks and maintenance of all associated machinery and equipment. Moreover, a safety program can be made more effective with the implementation of self-checks and accident investigation program. Another way to uphold safety at the workplace is to take advantage of loss control and safety programs formulated by your insurance company for improved safety and cost savings.
Job Analysis: Companies can put in place mechanisms that would study & analyze tasks carried out by workers. Based on the study, job specifications can be created and workers can be hired based strictly on prescribed specifications. This would help reduce injuries & improve safety standards associated with a job type, wherein only individuals physically and mentally suited to the task shall be employed.
Maintain Intoxicant-free Environment: Companies with higher occupational hazard factors must formulate policies that make it a punishable offence to consume intoxicants during the job. Anyone found breaking the rule must be dealt in the strictest manner possible to set a precedent for others to not indulge in such behaviour and compromise safety.
Deal with Disgruntled Employees: Make it a priority for the HR department to deal with employees that have grievances. Give them the space to voice their concerns and treat them with diplomacy and tact so that they may not negatively impact the productivity nor compromise established safety obligations on the shop floor.
Report All Claims: It would be judicious for a company to report all claims and work with the insurer to determine the fastest and most efficient way to report claims. Always communicate claims (no matter how small) with the insurer and work with them to provide prompt treatment to the worker.
Obtain Permission for Small Claims: While in principle, all claims must be reported to the insurer. However, obtain permission from the insurance company to settle small claims that are less than $500 that can be settled out of pocket. This would help you in keeping small losses out of the mod rating.
Make Communication Mandatory: Communicate to all workers on the shop floor about the importance of immediately reporting injuries to the manager or supervisor. It can be good if the supervisors and managers are trained in dealing with injuries to workers. This would make them better at communication during the situation and enable them to provide quick medical attention to the injured worker.
Implement Claims Management Program: This kind of program would allow the company to manage outstanding reserves and focus on efficiently closing open claims. Reserves can vary based on the type of injury, seriousness, and the duration of the claim. Companies can actually review loss information and can even challenge outstanding reserves that are not deemed reasonable.
Review Loss Runs: It can be good for a company to review the losses on a regular basis and get your claims administrator to have regular meetings with the claim adjuster. They could review claims above a certain magnitude let’s say claims above $5,000. To be on the safer side have at least 1-review meeting with your insurer before submitting loss data to the rating bureau.
Select a Good Doctor: A company must have in place a good doctor with experience in occupational health hazards. They would have a better understanding of the treatment protocols to be followed in case of injury to a worker. Having the right physician at the right time would help in controlling medical costs.
Engage with the Doctor: Once a doctor is in place for the workplace, work closely with him/ her and get them to learn about the job hazards and the nature of the business. This kind of engagement will allow the organization to enhance the success rate of workers returning to work after an injury.
Referral Network of Specialists: A company can put in place an exhaustive list of medical specialists who can be referred by the first-line doctor, whenever the situation demands.
Positive Communication with Worker: It is imperative for the company to sustain positive communication with the doctor and the worker. Management must be sensitive to the doctor’s advice and must follow through on all restrictions laid out by the doctor in getting the employee back to normal. In cases, when a doctor recommends light work for the employee, the managers and supervisors must find a place and accommodate the employee in an earnest manner.
Injury Management Co-ordinator: A company can assign an injury management coordinator to function as a necessary link between employee, doctor, claims adjuster, and the company. This will expedite the claims process by making it more efficient.
All the aforementioned steps are meant to inculcate a company with measures that help improve the mod factor, which in turn will reduce insurance premiums for workers. An improved mod factor would make your business operations more appealing to many underwriters, who will readily offer rate deviations or loss-sensitive rating plans that may not be made available to your company otherwise. Overall, it will help save costs arising out of medical claims.