AWC Blog

4 Reasons Your Workers’ Comp Experience Mod Went Up

increased experience mod

In reviewing your most recent workers’ compensation paperwork, you notice something out of place. Your experience mod went up – again. This means higher premiums and more money you have to spend.

There are a number of things that can lead to an increased ex mod. Take a look at few common reasons you should know about so you can understand exactly what you’re being charged for and why.

Split Point Increase

The split point of the losses from your workers’ comp claims increased in 2013, 2014, and 2015, most recently to $15,000 with a two year inflation adjustment. This is the first increase in 20 years while the average cost of claims have tripled in the same time frame. Claims that cost more than the split point have a greater impact on your experience mod. At the same time, employers with few or no claims greater than the split point may even see a reduction.

Expected Loss Changes

Expected losses are calculated by the total amount of your payroll, divided by 100, and multiplied by the expected loss rate for each job classification. The expected loss for your company can be affected by an increase in payroll, an increase in the expected loss rate, or a change or addition in job classifications for your business.

Payroll Changes

As mentioned before, payroll increases can affect your expected loss which can cause an increase in your ex mod. Look at why payroll increased and if your workers’ comp claims increased at the same time. Did you need to hire more people to keep up with demand and an improving economy? Wonderful! But were the best people hired and were they well-trained in safety protocols for your company? New employees mean higher payroll, but it can also mean an increase in risk and workers’ comp claims.

Overall Losses

If you’re confused about how you had an increase of your ex mod when you’ve lowered your claims for the past couple of years, it helps to understand how ex mods and workers’ comp premiums are calculated. When determining your ex mod (and premium total), three years of losses are used. If your safety program is relatively new, and you lowered your number of claims or the total losses of each claim, that’s great, but it may not make up for losses you experienced the two years prior to that.

It can be frustrating to see your workers’ comp costs go up, especially when you know you’re doing everything in your power to reduce claims. When you see the numbers go up, consider these common reasons to understand what happened and if there’s anything you can adjust to keep you workers’ comp premiums as low as possible.

If you’d like to find a way to save on your workers’ comp insurance premiums contact us, today.

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