How Your Experience Modification Rating Can Help
February 14 2021
Often times we get asked if there is anything a client can do to help their insurance costs. When it comes to workers’ compensation insurance, there is. This is where your Experience Modification Rating comes into play. An Experience Modification Rating is the rate at which your annual premium will be adjusted based on your past claim history. Most companies will have a MOD depending on your business size, and your action or in action when it comes to loss control and safety can affect your rating and help to determine your insurance premium for your workers’ compensation insurance.

Your Experience Modification Rating is based on your past claims history and depending on the severity and frequency of your claims you may get credits or additional premium when it comes to your insurance premium. The fewer claims you have, your Experience Modification Rating will go down resulting in credits. The more claims you have, the higher your Experience Modification Rating will go resulting in additional premium. For example, let us look at a policy with an annual premium of $10,000. If your Experience Modification Rating is 0.9, then you would get $1,000 off your premium. However, if your Experience Modification Rating if 1.1, you would end up paying an additional $1,000.

Your Experience Modification Rating is calculated on an annual basis and has a 3-year tail. This means that you will not see the impact of a recent claim immediately and that any claims will influence your rating for 2-3 years following the incident. This claim history is then used in comparison to employers who are within the same classification as you to get your resulting Experience Modification Rating. In simple terms, an Experience Modification Rating compares actual losses to expected losses. This is why it can be helpful to create a culture of safety as it can save you money and keep employees safe.

Creating a culture of safety can be vital in helping to control your Experience Modification Rating. It is important to offer safety training and personal protective equipment to employees. It is best to keep a record of any trainings an employee has partaken in and have them sign off on it, acknowledging that they took and understood the training. A formal program is also a great idea and is something that DFA Insurance can help employers to create.

DFA Insurance offers loss control and safety training programs to our customers in an effort to reduce or eliminate the potential for injuries or fatalities on farms by controlling existing or emerging workplace hazards. We have trained staff on hand to help your agri-business get started with a safety program or to modify an existing program.

When it comes to worker’s compensation insurance, you have the power. You have the ability to help set the costs and make your business a safer place to be. By implementing safety programs and trainings, you can lower the number of claims on your records, and potentially better your Experience Modification Rating. Start today! Give DFA Insurance a call at 1-877-358-9523 and get the conversation started!