The National Council on Compensation Insurance (NCCI) calculates experience modification factors (EMOD) rates based on claims information reported to the Arizona Industrial Commission by your insurance company. Business owners can contact NCCI and obtain a free copy of their EMOD worksheet to better understand how their claim history is impacting their EMOD score.
What is an Experience Modification Rate, EMOD, X-Mod, or EMR?
Your EMOD is a discount or debit that impacts your Workers’ Compensation premium. It is available for business owners who generate at least $3,000 in WC premiums over the last two years. It is determined by comparing your actual losses to the losses NCCI expects for your industry and business size. It is developed for your claim experience over your past three policy terms, not including your current term. An EMOD of 0.80 gives you a 20% discount whereas a 1.20 EMOD gives you a 20% debit.
How Frequency and Severity Claims Impact Your EMOD (And Raise Your Premium)
Claim frequency and severity are key factors in the development of your experience modification rate. A higher frequency of claims, even if they are small in severity, can cause the EMOD to increase due to the increased risk of future incidents. Conversely, severe claims can also significantly raise the EMOD as they indicate a higher potential cost for the insurer, reflecting a higher risk profile for the business.
A history of frequency or severity claims will also reduce your negotiating power when shopping your WC policy. It can lead to markets declining to work with you until your safety results improve. Some businesses discover that their only WC option is the Arizona Residual Market, the market of last resort.
After managing a $30M book of business as a senior underwriter at CopperPoint Insurance I have a lot of experience reviewing workers’ compensation claims in Arizona. A piece of advice I give customers is that claim frequency is viewed more critically than a once-in-twenty-years $1M claim. Why? Claim frequency.
How to Order Your Free NCCI EMOD Worksheet
Business owners can request a copy of their experience rating worksheet from NCCI by calling 800-622-4123 option 4. Once NCCI verifies you, they will email you a copy of your worksheet within minutes. It is that easy.
Tips to Reduce Workers’ Compensation Claims
- Promote a Return to Work Program
- Implement workplace safety programs
- Utilize your policy’s 24/7 nurse triage service to assist with non-emergency accidents
- Provide Personal Protective Equipment (PPE)
- Analyze and Monitor Claim Cost
- Offer Safety Incentives to Employees
- Work with Wilson Insurance!
Why Wilson Insurance
When you work with Wilson Insurance you work with an experienced agency that proactively works to lower your insurance costs. As we review your safety results, we will help identify behaviors that lead to financial leakage. We will work with your leadership team to set measurable goals that will have a direct impact on lowering your insurance costs. We will develop a persuasive narrative to communicate your efforts to competing insurance companies to spark a bidding war for your business. When you win, everyone wins!
Interested? Let’s connect! You can reach Justin Chappell at [email protected] or the office at 480-964-2400.
