How Can You Control Your Modification Factor?

        Understanding Your Modification Factor


Your mod factor has a direct impact on your workers’ compensation premium. The key to controlling your insurance costs is accident prevention.

     • The mod is calculated based on data reported to the rating bureau by
     past insurers. Incorrect or incomplete data can cause incorrect mod factors.
     Review loss and payroll data to ensure the calculation is complete and accurate.

     • Losses remain in the experience rating formula for three years.
     The experience modification factor is influenced more by small, frequent
     losses than by large, infrequent ones.

     • Develop a sound safety program, return to work program and appropriate
     prevention procedures to reduce loss frequency.

     • An effective self-inspection and accident investigation program are
     critical to managing claim frequency.

     • Implement an active claims management program to manage
     outstanding reserves and focus on efficiently resolving open claims.

     • Report all claims to your carrier immediately.

     • Take an aggressive approach to providing light duty to all injured
     employees upon their release
from treatment.

     • Set safety performance goals for supervisory roles. Success in achieving
     safety goals should be used as one measure during performance appraisals.

     • Train employees on their responsibilities for safety, and enforce violations.

     • Frequently communicate with employees on a formal and informal
     basis regarding the importance of safety.

A key to understanding your workers’ compensation premium is the experience modification factor, also known as your mod. Understanding your company’s mod and the data used to obtain it helps you identify ways to minimize your workers’ compensation premium.