The cost of workers’ compensation (WC) insurance is likely to be one of your highest expenses for your business insurance. Yet, business owners are unfortunately unaware that they have a certain amount of control in managing the cost. It is like dieting without exercise…focusing on numbers and not on results.

So how are premiums calculated?  Premiums are calculated by how employees are classified, size of the employer’s payroll and company’s claim experience. 

Payroll (per $100)   x  Classification Rate   x   Experience Modifier  =  Premium

Your Experience Modifier, typically referred to as your MOD, is a numeric representation of your company’s claim experience.  MODs are based on how your business compares to others in your industry with similarly classified employees.  An average MOD is set at 1.00. Employers with fewer and less severe accidents than average have a MOD of less than 1.00.

When it comes to review, insurance companies will examine your loss run report, including the frequency and dollar amount of your claims, to determine whether your premium would be more or less than the average. Also, the longer a claim stays open, the more it will cost you. We can help you avoid inflated premium assessments by advocating on your behalf to explain past incidents and discuss mitigation strategies moving forward.

Here are some tips to being proactive:

  • Make sure the leadership in your company exemplifies a culture of accountability. Their behavior on the job must establish the type of behavior that will lead to the highest standards of safety. It starts at the top.
  • Incentivize your employees for safe behaviors. Offer bonuses for no lost time during a certain period of time. Awards and recognition make employees proud of their accomplishments and strengthen company culture. Implement effective hiring and training procedures to reduce the risk of accidents for new hires. Clearly detailed job descriptions go a long way towards reducing injuries and also may shield the employer from claims of negligence.
  • Understand and manage your company’s Experience Modification Factor. It is imperative that you understand it and share it with your employees and leadership team so that everyone can take an active part in making a positive impact on it.
  • We can also help with asset preservation by reviewing vendor contracts and certificates of insurance to ensure proper wording and sufficient risk protection. Services may include reviewing hiring practices, safety training protocols, frequency and effectiveness of retraining, and hazard reduction initiatives. Questions we may pose, for example, include “Are physical requirements clearly explained in your job descriptions?” and “Are there avoidable safety hazards in the workplace?”

So how can we help you? As your risk manager, our focus is to help manage your risk profile. We spend time with you to get to know your company and processes in place. This review is to accurately represent you with integrity, along with a mix of grit and determination to get you the best possible program and fair premium.

The beauty in implementing these changes is that not only will your company be better protected in the event of an accident, but your employees will be better off too. Recommending safety improvements, eliminating work hazards, clarifying expectations, and instituting new policies can all contribute to a better work environment in which employees are likely more satisfied and productive. This shift can pay off big in protecting your company’s assets and reducing operating costs, allowing you to invest fully in your company’s future.

Please contact me personally to learn more about managing your risks. My direct dial is 219-369-0215 and my email is I would be happy to take a tour of your facility, learn about your organization and certainly help you manage your risks.

This article was published in the Fall 2018 issue of the General Insurance Services Risk & Business Magazine. Access the full publication here

Business Insurance




Be Proactive in Managing the Cost of Workers’ Compensation

Be Proactive in Managing the Cost of Workers Compensation