By: Steve Sayer
Keep your company’s X-mod low, lower, lowest
(The views and opinions expressed in this blog are strictly those of the author.)
Is your company maximizing all of the available avenues towards reducing and maintaining low workers compensation costs? Understanding fully the DNA of the X-mod (experience modification rating) and monitoring it regularly is one of the keys to reducing your workers compensation costs.
Know that the X-mod is a numeric representation of the claim history of your company. Normally it represents the last three consecutive years of claim payments made on your behave. The X-mod assigned to your company’s job classifications is a comparison of your claim record to that of all other employers in your state with identical job classification code(s).
Your premium for workers compensation is determined by a number of different criteria. 1) The rate assigned to each payroll classification in your business; 2) The total amount of your payroll for each classification; 3) and your company’s X-mod.
The amount of risk assigned to each payroll classification in your company is calculated by rating bureaus or advisory organizations. Many states use the National Council on Compensation Insurance (NCCI) while some states utilize their own rating bureau that is independent of the NCCI.
The type/category of claims you experience and what YOU DO to control the cost of claims has a significant effect on whether your X-mod will be in a credit (under 1.0) mode or in a debit (over 1.0) mode. There are several ways a prudent employer can substantially lower their X-mod and keep it low; thus saving rather hefty sums of money.
Once again, companies that have in place a well-managed and thought-out industrial safety and health program win again because there’s a direct and unequivocal connection to low workers compensation premiums, effective industrial safety programs, and low X-mod rates. You’ve read it time and time again in this Working Safely blog. A pro-active safety and health program (tap here) keeps/maintains injuries and illnesses to manageable levels. No or low injuries/illnesses and your claim payment history will remain dirt-low. It’s that simple.
The lower the claim history payment, the lower your X-mod shall be including prevailing workers compensation insurance payments. In these tough economic times (tap here) having a pro-active safety and health program can really contribute to a company’s bottom-line.
A well-organized return-to-work program (tap here) will pay back major dividends to your company beyond your wildest imagination. When an injured worker is medically approved for light-duty work assignment, the cost of that specific workers compensation claim will be greatly reduced by getting that person back to work ASAP. Talk to your risk management insurance carrier and your industrial clinic about return-to-work policies and procedures.
I usually recommend that company’s write up a unique job description (in a language that they can fully understand) of what the injured worker can and cannot perform (based exclusively on the industrial doctor’s report) and have the injured worker sign and date the job description (including the industrial clinic and assigned doctor) with at least two signatures representing plant management. Record of retention of such documents should be – forever. In addition, I recommend periodical reviews with the injured employee with signatures and dates until the injured employee is cleared for full and unrestricted duty by the attending physician.
A careful review of the job classifications (tap here) at your company could very well result in significant savings to your company as well. This can be done by hiring an independent workers comp auditing company that would also review your payroll, comp reserve levels, workers compensation claims and the application of rates; you may be pleasantly surprised.
May 11, 2011
