Understanding your mod is only valuable if you use this information to control your mod. The motivation for lowering your workers’ compensation mod is obviously to have a lower workers’ compensation premium. However, a low level of workers’ compensation claims has a broader impact on your company. The savings you generate by controlling your mod allow you to invest more in your company’s operations than competing firms. Safety, therefore can become its own profit center with significant payback.
Verify the Accuracy of the Payroll and Loss Data
The initial step in controlling your mod is verifying that the information on it is correct. There are two types of data in your mod calculation: loss data and payroll data. The majority of incorrect mods that are issued are incorrect due to erroneous data. There are several things you can do to ensure accurate data is utilized in your mod calculation.
First, actually look at your mod worksheet! Compare the loss and payroll data used in the calculation to another source document. A payroll audit or a third party, such as an accountant or payroll service provider, should be used to verify payroll data. Information on losses should be obtained from your insurance company.
Occasionally, a claim that has been settled for less than originally anticipated, may not have been updated to the lower amount on your mod worksheet. Also, if the insurer has received subrogation on a particular claim, the lower net claim cost may not be reflected on your mod worksheet. Subrogation is when the insurer makes a claim against a third party who is liable for a loss that has been paid by the insurer. For example, an injury results from a forklift accident. In investigating the accident, it is discovered that a defect with the forklift actually caused the accident. If the insurer then made a claim against the forklift manufacturer, the amount paid to the insurer should be deducted from the employer’s loss record when calculating the mod.
Take a few moments to ask your insurance adviser questions concerning the losses used in the calculation. Verify that he or she has given thought or investigation to the accuracy of the loss data. If you have additional questions, please feel free to contact our insurance professionals.
Do these classifications seem to make sense to you? You are in a position to know, better than your insurance company, what your employees are doing and whether or not the classification is appropriate. In this case, changing incorrect job classifications may have significant impact on both your mod and your basic workers’ compensation premium.
When judgement is involved in determining the correct payroll classification, a careful analysis should be made of the impact of changes in the codes on the premium and mod. Also, if it is determined that a job has been misclassified, investigate the possibility of having historical mods recalculated to reflect this change.