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Protect Your Ex-Mod, Protect Your Profits

We already know that Work Comp Insurance for FXG ISP and IC businesses (codes 7231, 7228 and 7229) is expensive.  There are ways to lower the cost of Workers Compensation Insurance.  Let’s save you some money by helping you keep or acquire a Low Experience Modification Rate.

What is an Experience Modification Rate (ex-mod)?

Your ex-mod is a calculation that compares your workers comp loss history to the loss histories of other similar businesses.  This number has a lot of power.  In short, it tells the insurance company if you have been a good risk or a not so good risk.  The lower the number, the more an underwriter gets excited.  Underwriters tend to fight for your business if you have a low ex-mod.  With FXG ISP’s and IC’s, we have seen mods from 0.77 to 2.01.  Any number below a 1.00 means a credit (discount) on Work Comp Insurance.  Any number above a 1.00 means a debit (percentage increase).  A 0.90 ex-mod will give you 10% in savings.  A 1.50 ex-mod will add 50% more to your annual premium.  With subject premium of $50,000, the Work Comp premium costs for those two ex-mods differ by $30,000 in a single year.

How do we keep Mods low?  

Of course, being claim free of Workers Compensation claims is the best way.  We want to lessen the number of claims and the severity (amount paid for each claim).  Getting your employees to be engaged can make a world of difference.  I don’t mean engaged to be married though that may make them more responsible (it worked for me).  I mean actively engaged in safety processes throughout the entire work day.  Do your drivers look where they are walking?  When they take a package off the rack, are their eyes on the package or are they already trying to walk out of the truck?

Some Insurance Companies offer great educational material, safety evaluations, seminars and/or technology to help get your employees engaged in the safety process.  Ask your agent and your insurance carrier what is available.  Take advantage of the opportunities so you can see your ex-mod decrease and your profits increase.

Food for thought: In my opinion, a good ex-mod is an asset that has a calculable monetary value.  An ISP or IC that decides to sell their routes, can get a better sale price with a better ex-mod.

 

 

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