Experience modification (ex mod) refers to the amount of workers’ compensation claims made at your business as compared to overall payroll. High modification rates can eat into company finances as insurers deem your business as a high-risk client. Businesses that are not sure about reducing ex mod rates can be on the lookout for these warning signs to know that it’s time to take action:
1. Safety Goals Aren’t Being Met
Management at a company should be aware of safety guidelines and whether or not those standards are being met. If shortcuts are being taken in order to pass muster, it will affect the business in the long run.
2. The Company has Taken on Large Losses
A number of factors come together to determine a company’s ex mod rate. One category of factors that may go unnoticed is large or unexpected losses. If the company has suffered such financial losses, it would be prudent to take proactive action to mitigate the impact on ex mod rates.
3. Insurance Premiums Are Too High
The most obvious and impactful sign that your ex mod rate is too high will come in the form of expensive insurance premiums. If your company is deemed too risky to insure, it will be necessary to reverse your reputation as such.
A high number of workers’ compensation claims will inevitably cause a need for reducing ex mod rates. Careful business owners will need to protect their financial assets by monitoring signs of an increasing experience modification.