The experience modification worksheet is a critical tool used by rating bureaus like the Minnesota Workers’ Compensation Insurers Association (MWCIA) when calculating your workers’ compensation premiums. Errors on this document, while rare, do occur and can add significant costs to your workers’ compensation insurance premiums. However, even when errors do occur, it can be burdensome to re-file this document and it’s not even always possible.
Correcting Errors & Refiling
First of all, it’s important to review your worksheet immediately when you receive it from the rating bureau. This review doesn’t have to be complex, but should include:
- Ensuring your payrolls are listed accurately
- Comparing listed losses to those on your current loss runs, looking for file closures and to determine if re-files are appropriate
- Confirming that claims are classified appropriately (i.e. all closed claims should be labeled as closed, etc.)
If you do find errors on the worksheet, communicate these to your agent and/or insurance carrier immediately to have them corrected.
If a claim identified as open on the worksheet has since been closed within that worksheet year, a re-file may be appropriate. This can immediately lower your experience modification rating, but isn’t always allowed. For example, in Minnesota, re-file requests must meet the 5% aggravated inequity rule, meaning the change would drop the rating down by five points or more.
Carriers generally do not automatically request a re-file; therefore, it is important to review your open losses continually throughout the year and make sure your agent knows when claims are closed.
Requesting experience modification document re-files is a reactive approach and isn’t even always possible. Reviewing all open losses prior to filing your Unit Stat Card, on the other hand, is proactive and much more helpful.
Six months prior to your policy’s renewal, the workers’ compensation carrier takes a snapshot of your losses for the three-year rating period—the three years prior to your policy’s effective date—and reports it to the ratings bureau. Reviewing these reported losses is key because it enables you to request reserve reductions and file closures when appropriate, which can reduce your resulting experience modification rating and, thus, your insurance premiums.
While all these activities can be done on your own, they take time and are best done by professionals who know what to look for and the best procedures to follow. Always ask prospective insurance agents or brokers to provide you with examples of their expertise in Unit Stat reviews and experience modification worksheet re-files. Well structured, ongoing claim management procedures by a competent claims-specific team are good things to seek out when evaluating insurance advisors and providers.
Experience Mod Forecasting
As part of an ongoing experience modification rating review process, you should also look ahead to what the future holds for your experience modification rating. Well-qualified agents and brokers can provide you with an estimated EMR using sophisticated analytics software and models of likely premium scenarios. This can help you plan accordingly for any upcoming premium change due to the experience modification rating.
Marsh & McLennan Agency performs all these strategies to help ensure clients’ experience modification ratings are accurate and they are not paying more than necessary for their workers’ compensation insurance.