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“How to Calculate Your Minimum Experience Mod, Controllable Premium & the Revenue Impact”
Is it more- damaging to your workers’ comp experience mod to have ten $10,000 workers’ comp claims or a 0ne $100,000 workers’ comp claim? Hello, my name is Michael Stack and i am the CEO of Amaxx. And what we’re discussing in todays video is the idea of frequency vs severity and which one is more impactful ultimately on your workers comp experience mod and ultimately your workers comp premium and total workers comp costs.
If you’ve been the around the industry for any length of time or have any amount of experience in this type of idea of looking at your experience mod and what actually happens, you will know that the answer to this question is the idea that ten $10,000 dollar claims are more impactful to your experience mod than one $100,000 claims particularly if you’re a smaller organization with a very low weighting value on your experience mod. Now, going into the details of what the weighting value actually means is more than we can cover on this particular blog but the idea is what we’re trying to do here and we think about the idea of what experience mod actually is what you’re trying to do on an actuarial type standpoint is a perception of risk. So, a perception of risk. Just like your credit score is a perception of risk for your individual ability to pay back debt. Your experience mod is perception of risk for your future experience in managing and handling workers’ comp claims.
FREE DOWNLOAD: “How to Calculate Your Minimum Experience Mod, Controllable Premium & the Revenue Impact”
A company that is having a lot of small claims is a much riskier company or perceived as a much riskier because any one of these claims can turn into a $100,000 claim. A company that very infrequently or severity has high severity but low frequency is not perceived as as risky as this one up here. So when you’re looking at this perception of risk and you’re thinking about the total understanding of what the concept is, of what the experience mod is actually trying to do. Its trying to give an actuarial or a numbers within numbers assessment of the perception of risk. Frequency is going to have a larger impact particularly on small companies than severity. Again my name is Michael Stack and i am the CEO of Amaxx and remember that your work today in workers’ compensation can have a dramatic impact on your company’s bottom line but it will have a dramatic impact on someone’s life. So be great.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center, which offers the Certified Master of Workers’ Compensation national designation.
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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