How to help your clients achieve lower workers’ comp rates

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Your clients can achieve lower workers’ comp rates. Here’s how.


  1. Work comp premiums are calculated using classification codes, total amount of payroll per class, schedule rating and ex-mods.
  2.  Ex-mods are an insured’s last three years of claims experience.
  3. View six ways your insurance client can lower their rates.

Prices are up. Inflation is taking its toll. And your clients are looking for ways to cut expenses. Here are ways that they can achieve lower workers’ comp rates – by lowering their ex-mods (experience modifers). As a reminder, premiums are calculated using a few primary factors: the rate as filed by the carrier per classification code, the total amount of payroll for each class, schedule rating if warranted, and the client’s ex-mods, if the insured qualifies. (Of course, other factors apply as well, such as territory factors, premium discount factors, possible filed group discounts, etc.)

Ex-mods represent the insureds’ claims experience using a three-year timeframe (not including the expiring term), and is based on a comparison with other companies in your state having the same applicable classification codes.

“If your client has lower-than-average work comp claims, and they qualify for an experience mod rating, they’ll experience a lower ex-mod which can contribute to lower premiums,” explains Becky Pinto, president of Arrowhead Workers’ Compensation. “The converse is true too, unfortunately: If their claims are higher than the average, their ex-mods and likely their premiums will be higher.”

Related: 8 Workers’ Compensation Trends Affecting Your Clients

But there are ways insureds can improve their ex-mods and lower their premiums, she added. Here’s how:


1. Know their rating period

As their broker, you can help them lower workers’ comp rates with this first step: knowing the length of their rating period and the precise time period it covers. Is it a short-term or annual policy? Or is it the three-year period used to earn their ex-mod? From there they can determine what claims fall within that rating period. Now your client knows the time frame that they must work in, to lower their ex-mods.


2. Mitigate workplace hazards to lower workers’ comp rates

OSHA requires companies to have a “competent person” who identifies and corrects site hazards in multiple industries. While your client may not be part of those industries, it’s still a valid concept to have such a person skilled in finding and fixing any potentially dangerous issues, from a frayed carpet to improperly stored chemicals. These person(s) should also help in tracking employee injuries, perform incident analyses and run OSHA 300 logs.


3. Enforce compliance

Whether or not their workforce is large enough to recruit a safety training officer, it’s crucial that management and employees understand OSHA safety regulations plus state and local laws, to effect lower workers’ comp injuries which can also contribute to lower rates due to lower ex-mods. These may include labeling of hazardous materials, equipment certification, emergency planning and evacuation maps.

Related: How faster workers’ compensation claim reporting can reduce costs

“Training and educating employees regarding safety and proper use of equipment will help prevent accidents,” Pinto says. Following a specific protocol for all accidents ensures incidents are reported timely and further injuries can be prevented. When the employer creates a culture that emphasizes the importance of safety, claims frequency and severity tend to decrease.


4. Emphasize safety training to lower workers’ comp rates

Brokers, work with your clients to spotlight safety training as they’re onboarding new employees. And by adding and enforcing training at set intervals throughout the year, you can help them establish employee health & safety (EHS) targets, strategies and timelines and assist them ascertaining if they’re meeting their goals. are a multitude of training programs, software and manual online that you can share. Arrowhead also has safety training material available; contact your business development specialist for details.

Related: Are you at risk for small business work comp fraud?


5. Conduct regular audits and keep thorough records

Not only to lower workers’ comp rates, but also for safety’s sake, urge your work comp clients to inspect and test their equipment and systems for potential hazards or areas that simply need updating. Encourage them to record information regarding every incident, steps taken to mitigate recurrence, list individuals involved, and confirm updates and audits are completed.

Related: Avoid these top 7 workers’ compensation claim mistakes


6. Don’t use uninsured subcontractors

If subcontractors don’t have their own workers’ comp coverage, they’ll very likely be covered under your client’s coverage (there are very specific rules that apply to be considered an independent contractor and thus not an employee). If a subcontractor does not qualify to be an “independent contractor” and they are injured while working for your client, this will impact your client’s experience, and their work comp costs could increase.

If this sounds like a lot of work to your client – well, it can be. But they will reap the rewards of lower ex-mods and lower premiums when their safety emphasis reduces their number of exposures and claims.