Has the experience mod been checked for accuracy? Some of the most obvious places to look for errors in the experience modification are:
- Experience Rating Period (ERP)- This is where many mistakes occur (especially when policies have been canceled before normal expiration date.) The ERP is 36 consecutive months during which the policies that cover an employer are included in the mod calculation. Typically the ERP begins forty-eight months before the effective date and ends twelve months before a mod becomes effective, but there are exceptions.
- Payrolls – Are the payrolls in the ex mod correct (they are from past audits)?
- Losses – Do all the losses in the ex mod belong to your organization? This insurance is expensive enough; you don’t need to pay for someone else’s accident. Be sure to check loss runs against the ex mod.
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- Preliminary or Contingent — This is a sign of potential trouble. Is the ex mod on the policy labeled as preliminary or contingent?
- Claims – When was the last claim review conducted? Were losses closes before the ex-mod’s unit date? Is that reflected in the mod worksheet?
- Large Losses – Are they capped at the state maximum? Do you know your state’s maximum loss?
- Last mod calculated – Typically rating bureaus and the NCCI update ex mods as they receive new data. Your policy should contain the last ex mod calculated. Often the paperwork slips thru the cracks and the policy reflects an out-of-date ex mod. Has your producer confirmed that the mod on the policy is the latest?
Hope this is helpful. Many thanks to Norman Goodman at www.zapcomp.com His fees are contingency based so if he doesn’t save you money there is no charge.
