The New York Compensation Insurance Rating Board or NY CIRB has released a new formulation for the workers’ compensation experience rating modifier. Most business owners know the experience rating modifier as the x-mod, the e-mod, or just the mod.
The modifier is a credit-debit system to reward employers with better than average workers comp claim experience over a three-year period of time and charge more for workers comp for employers with higher than normal or expected claim experience over that time period.
In the board’s opinion, the rating system prior to October 2022 did not reward good accounts sufficiently enough, and on the flip side did not – well, let’s say punish accounts with high loss ratios sufficiently enough either.
The new experience rating modifier system is going to result in two things.
Employers that exert good risk control processes and procedures and have few claims than their peer group will see their mod and their premiums go down by a greater margin than in the past.
And, you guessed it, employers that don’t have good risk control and have higher claims than their peers will get hammered by this new formula.
For the second group, the only good news is that the board has a transitional factor this year so that your mod can only go up by 30 points – which is significant, but without that transitional factor some risks can see very large increases.
The intent of the board’s actions is to incentivize workplace safety.
That’s good for you as the employer, that good for your employees, that’s good for your company, and that’s good for your insurance costs.
That’s no secret.
Unfortunately, many employers – even larger employers don’t know where to start when it comes to workplace safety and risk control.
If that’s you – we should talk. We help our clients in this area and see great results in the short term and I know we can help you too.
Now, I’m not going to dive into how the formula is changing.- it’s pretty complex – but I can tell you that larger employers will see significant changes this year and moving forward.
On top of these experience rating modifier changes, the New York Department of Labor has also recently announced a change in Code Rule 59.
Larger employers who may have had safety issues in the past may be familiar with this workplace safety and loss prevention process from DOL.
If you have over $800,000 of payroll and an experience mod of 1.2 or greater you will be required to conduct a comprehensive safety and loss prevention audit and consultation.
In and of itself, this isn’t a big deal, but what is becoming a big deal is that more employers in N Y will be subject to this ruling – like a four-fold increase. And, for those employers in the NY State Insurance Fund who are subject to Code 59, they may see a surcharge of 8 to 14 percent on their workers’ comp premiums!
It’s sort of a double whammy.
Your mod will go up and you’ll get hit with this surcharge.
What’s the answer or solution?
I think for larger employers who teeter on the edge of a 1.0 mod or higher, you need to definitely be taking risk control seriously.
If you don’t insurance costs could price you out of the market and create serious disruption.
For employers who fly below that 1.0 mark but don’t have a written safety and risk control plan that’s practiced daily, then I think it’s time to invest in safety.
Under this new formula, it’s only going to take a couple of large claims to tip the scales out of your favor.
I’ve often said that for employers who have been lucky and had no claims or low claims – luck will only run so far.
Installing a proactive risk control system is not costly and actually helps to increase productivity and employee retention, while decreasing insurance costs.
Have other questions, issues, or concerns relative to your workers’ comp experience mod? If you want to learn how to control claims and the mod, then let’s chat.