In today’s world, you have a lot of numbers to track. There’s your TRIR, LTRIR, and the DART. And those are just for OSHA.
The good news is that you don’t have to calculate the Ex Mod or even track any data. It’s assigned to your organization, and you get an Ex Mod worksheet. But there are ten things you must know to understand what it means. We’re covering the core things everyone should know about the Ex Mod right here.
1. The Ex Mod Indicates Risk Based on Your Performance
Your company’s Ex Mod is the way your state’s independent rating bureau or the National Council on Compensation Insurance (NCCI) indicates your organization’s risk. The Ex Mod is quantitative, and you can boil it down to a simple formula:
Ex Mod = Actual Losses / Expected Losses
Using your actual losses means your carrier can track your risk more accurately over time. Otherwise, the ratings body must make predictions based on what’s happening generally in your industry. These will be less accurate and harder for you to impact.
In other words, you control your incident and injury rates. As a result, you control your Ex Mod.
2. The Ex Mod Reflects Your Past Three Years Claims
One of the most important things to know about your Ex Mod is that it hangs around. Your present Ex Mod is based on your past three years’ workers compensation claims and your premium. It doesn’t include your current year. Those three years are your experience rating period.
So if you want a lower Ex Mod and better premiums in three years’ time, you need to start now. And you need to remember that it will take three years to escape one “bad” year.
3. There’s More to the Ex Mod Than Losses
Claims and losses are a big focus, but they aren’t the only thing impacting your premiums or even your Ex Mod.
In fact, you don’t even get an Ex Mod automatically. You need to qualify via your state’s independent rating bureau or the NCCI first. Eligibility criteria include:
- Payroll spend
- Industry class codes
- Expected losses
Once you qualify, the rating body uses a highly complex formula based on both your industry and your company’s data. Some of the other items impacting Ex mod include:
- Company size
- Incident severity
- Incident frequency
- Cost (or loss) of incidents
Then, underwriters weigh the data to acknowledge the risk involved and balance it against individual company performance.
4. Low Ex Mods Can Give You Credits
The most important thing for a safety pro to know about the Ex Mod is this: securing a low Ex Mod (usually below 1.0) will grant you credits.
Credits apply to your premium and translate into savings.
Let’s say your industry average workers compensation premium is $100,000. If you have an Ex Mod of 1.0 (industry average) then your premium will remain at the industry average. If your Ex Mod falls to 0.75, you get a credit, and your modified premium is $75,000.
5. High Ex Mods Mean Surcharges
The second most important thing you need to know is that a high Ex Mod means higher premiums.
If you have an industry average premium of $100,000, then an Ex Mod of 1.25 will land you with a premium of $125,000. So you pay 25% more than the typical industry average for the same product — ouch!
6. Safety Programs Play a Huge Role in Your Ex Mod
Your organization’s payroll and class codes are strategic. The only way you can impact them to lower your premium is to lay off workers or stop performing work within riskier class codes. Both of those actions are out of the hands of the safety manager. And more importantly, they contradict company strategy.
The best way to impact your Ex Mod is through your safety program; though, your finance and HR team should ensure they supply accurate payroll and class codes to the insurer.
Ultimately, safety programs prevent incidents, which prevent claims, particularly repeated claims of the same injury. Even when injuries aren’t preventable, having a suitable incident response plan can mitigate the likelihood of severe injuries. A minor cut or a winter slip and fall won’t do major damage to your Ex Mod. But a lost eye, amputation, or crush injury will.
7. Claims and Recordable Events Aren’t the Same
You might think back to your OSHA 300 log and want to disappear into the floor. Your log contains a long list of minor injuries.
Here’s the good news.
OSHA 300A recordable incidents don’t always become a workers compensation claim and vice versa. And even when an incident becomes recordable and compensable, it doesn’t necessarily need to end up becoming hefty claims with the right interventions, like strong return-to-work programs.
8. Aggressive Claims Management is Important
Although claims management falls outside the realm of the typical safety manager, you still play a role in getting an employee back to work, which is a crucial part of the process.
Claims management helps you control the cost of the injury. When your claims are more expensive than your peers, it damages your Ex Mod, even if you don’t have the same claim frequency. Why? Because high claim cost usually correlates with more serious injuries with long-term effects. It suggests that you not only didn’t prevent the injury but you also didn’t do enough to mitigate its worst effects.
What can you do beyond work hard to prevent injuries in the first place? A safety pro’s role in claims management looks like this:
- Respond to incidents immediately, even if the initial report is minor or the worker claims they’re “fine.”
- Use medical evaluation to triage cases and ensure the right care is provided sooner: a nurse onsite can help you determine who needs treatment and when. Telemedicine is an increasingly popular option. Getting help right away can prevent complications.
- File claims quickly, and impress the need on those involved to participate in the process.
- Implement return to work programs and focus on getting employees back soon and safely. Modify their role, provide reasonable accommodations, and ensure they don’t inflame an injury when they get back.
9. Lower Ex Mods Make You More Competitive
Your Ex Mod doesn’t only impact your premiums. Working towards a lower, accurate Ex Mod also makes your organization more competitive.
Where does the advantage come in? First, your organization is more likely to win work, especially when bidding on state and federal government contracts. Lower Ex Mods correspond to lower injury rates and a perceived commitment to safety. You will win work over those with an Ex Mod of over 1.0.
A secondary advantage is the savings. Fewer injuries lead to lower out-of-pocket costs for the organization. Plus, you save on workers compensation premiums, which can eat up a significant amount of your budget, depending on your industry. Freeing up funds means your organization can spend it strategically, like on growing the team and investing in new technology.
10. An Ex Mod is an Incentive to Maintain a Safe Workplace
A major incident today will cost you in workers comp premiums for years, so there’s no better time to reinvest in a safety program. The goal of the Ex Mod system is to incentivize companies to invest in safety by providing both a carrot (cheaper premiums) and a stick (high-cost coverage).
Your Ex Mod is an Important Piece of the Data Puzzle
Like most individual data points, your Ex Mod doesn’t tell the whole safety story. However, it can be an indicator of wider problems, and it is a way of standardizing a company’s relative risk. So, it’s important to understand how your Ex Mod works and your safety program’s role in managing it.
Safety software is an important tool for managing your safety program and preventing incidents. When you use Safesite, you enjoy all of these benefits plus our partnership with Foresight Commercial Insurance. Foresight factors in safety engagement data into your premium while maintaining privacy. Qualifying companies who run their safety programs using Safesite can earn safety credits on their workers compensation policies.
Find out more about the benefits of safety software by scheduling a Safesite demo.
