Six months ago, a couple of weeks after pandemic-related business closings went into effect, Massachusetts Commissioner of Insurance Gary Anderson affirmed a ruling that reduced by 6.8 percent the state’s overall average Workers’ Compensation Insurance rate for policies effective July 1, 2020. Earlier this month, the state Legislature’s Joint Committee on Labor and Workforce Development effectively tabled two bills that would have cut into that reduction by making it easier for frontline health care workers diagnosed with COVID-19 to file Workers’ Comp claims.
The news, though welcomed by employers, was hardly cause for celebration. Here’s how the State House News Service summed up the developments:
“Massachusetts businesses are in line to save on workers’ compensation insurance over the next year while efforts in the Legislature to expand the ability of workers to tap into those benefits for COVID-19 care appear to have hit a dead end.”
Naturally, we advise employers proceed with caution.
While decreased average rates for Workers’ Compensation Insurance offer some relief to businesses reeling from the effects of COVID-19, this is no time to lessen the focus on risk management or overlook the importance of analyzing your Workers’ Compensation Experience Modification Rate, aka your “Mod.” As hard as it seems to believe sometimes, at some point the pandemic will come to an end (or something close to it), and inevitably Workers’ Comp rates will go back up. In the meantime, other factors – chiefly lost income and soon-to-soar Unemployment Insurance contributions – make saving money where you can all the more important.
Working with a business insurance team that includes a claims professional experienced in Workers’ Comp Mod analysis is a good place to start.
Let’s review
As I’ve written previously:
Insurance companies determine premiums based on your Mod. In the commonwealth, the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA) calculates your rate. Outside Massachusetts, the National Council on Compensation Insurance (NCCI) calculates your Mod. In either case, the calculation is based on factors including:
- worker experiences within your industry;
- your payroll;
- your claims within a given time period;
- severity of incidents.
The resulting Mod represents either a credit or debit that’s applied to your Workers’ Compensation Insurance premium, with a factor of 1.0 considered the industry average. A Mod of less than 1.0 earns a premium credit, while a Mod of greater than 1.0 causes a premium surcharge, and the impact on your business can be significant. The minimum mod is your goal.
Mod analysis and performance-based insurance
Fortunately, you can have a say in determining your Mod rate.
- First, practice risk management by creating and maintaining a safe work environment. The fewer injuries or illnesses your employees incur on the job, the lower your rate is likely to be. A good business insurance team can help by providing advice and resources to help you improve workplace safety.
- Second, work with your insurance team’s claims professional — if it has one — to determine whether the underwriter who assigned the rate made an accurate calculation. An experienced, knowledgeable claims specialist can find you savings where seemingly none existed.
- Third, if you’re in the Assigned Risk Pool or back in the voluntary market after leaving the pool, you may be eligible to participate in WCRIBMA Qualified Loss Management Program (QLMP) and earn prospective credit on up to four years of Workers’ Comp premium. Participating in the program requires a fee, but the savings you’ll earn will more than cover the expense — in some cases exponentially.
When my team refers to performance-based insurance, these are the sorts of proactive, cost-controlling measures we’re talking about. We live in uncertain times. It’s good to be able to exercise some degree of control.
By MIKE ISBISTER
Business Development Manager, Sylvia Group
CONTACT MIKE
About Mike Isbister and Sylvia Group
Throughout his 30-year career in sales and service, Mike Isbister has achieved success by combining analytics and action, recognizing that having meaningful data is important — but only if you know what to do with it. The analytics-plus-action approach works not only for Mike and his team but also for Sylvia Group clients. Through the process of compiling and breaking down data, they’re better able to analyze needs and exposures, review claims to determine risk-management solutions, and design comprehensive, cost-effective insurance programs.
Sylvia Group uses SPS – the Sylvia Protection System – to empower businesses and individuals with performance-based insurance, benefits and financial planning programs. SPS makes our clients active participants in managing risk and containing premiums, resulting in coverage that is both customized and cost-effective. In addition to making a difference for our clients, we make a difference for our community as a whole by actively supporting and serving many of southern New England’s most reputable and effective nonprofit organizations and institutions. Sylvia Group became an Alera Group company at the outset of 2020, enabling us to combine the local, personal service for which we’re known with the scope and resources of a national firm.
