The Ex-Factor: Getting Your Clients’ Workers Comp Under Control

Workers Compensation is one of the coverage lines this year that is beginning to see a rise in rates. As we mentioned in one of our blogs in January, MarketScout showed an increase in Workers Comp rates by 2%; this trend continued in January and February results are likely to show the same type of increase.

What’s more, with signs of the economy beginning to improve somewhat, more people are getting back to work and back on company payrolls, which has resulted in an uptick in claims in some industries. In fact, some in the insurance industry see new, rehired workers posing as great a risk for at-work injuries as those individuals who are brand new to a company and learning the ropes.

As an insurance agent, you can help keep Workers Comp expenditures at bay. One way, of course, is by evaluating your client’s experience modification factor. The mod compares the losses and safety results of an employer to other similarly classified employers in a given state for three years prior to the policy period. Those companies that have fewer accidents and losses than their industry peers will have an ex mod factor of lower than 1.00. Conversely, those with more losses and accidents will have a higher ex mod and will pay more premiums.

But errors are made in this area, so it’s wise to analyze a client’s or potential client’s mod for accuracy. Sometimes the benchmark used to compare an employer’s loss experience to the industry average will change from one year to the next. This can impact a customer’s ex-factor. And in certain industries, such as construction, healthcare, manufacturing, staffing, transportation, and other sectors, the assumption sometimes is made that the operation has more risk than it really does. The insured’s premiums are higher and premium credits such as rate deviations, discounts, and schedule ratings may be minimized.

At Caitlin-Morgan, we can help you with a Workers Comp program for your clients, reviewing their ex-mods, and implementing risk management strategies to stem losses. Give us a call at 877.226.1027.