Workers’ Comp Cost Formula To Accurately Assess Your Risk

Importance of Proper Classification

It’s gonna be talking about today primarily where a lot of our training focuses, a lot of my training focuses is over in this area, which is your experience mods, your adjustments. So this is your premium adjustments, and these are discretionary adjustments that can be given by your underwriter based on how well they perceive you managing your risk, how well they perceive you managing your risk. And this is by documentation, by risk control systems, by your return to work plans, by your completed first reports of injury, by your injury reports, etcetera, your communication, your protocols, how you’re doing it, what’s your system, why is your mod, you know, at a 1.7, and why are we gonna try to get this risk up because you’re saying, hey. We’ve got things under control based on your mod. It’s it’s not showing me that you do. So you’re based on the perception of your risk. You’re gonna have to some of these premium adjustments. Your payroll times your rate, type your experience mod.

Understanding the Components

And if you’re not familiar with your experience mod, I’ve got a great course on the experience mod and how to understand it, how it works, how it all comes together, the adjustments we just talked about, and then here’s your losses. These are actually the losses themselves. How much did it cost for indemnity, for medical, for expenses, etcetera, in order to pay for those losses? When you put all these things together, it ends up being your total workers’ comp cost. And these losses, which I should reference, is this is in a high deductible or a loss sensitive any loss sensitive program and this could be high deductible, it could be a retro plan, it could be some captive plans where you’re participating in some of the losses. If you’re not if you’re in a guaranteed cost plan, then these losses are not a part of your equation not a part of your equation. You’re just premium times rate times experience bond if there’s any adjustments, and then that’s what your premium is that you’re gonna be paying.

Achieving Accurate Risk Assessment

Alright. So let’s talk about this. As we look at this, major concept major concept major major concept that I want you to grasp as we are going into today’s training. The goal of this whole formula, this goal of this entire formula is basically so that the carriers, the underwriters, the actuaries can get an accurate assessment of your risk. Say that again. The main goal of this whole formula, this whole process, the experience mod, the adjustments, the rates, the payroll, the premium, the losses, The whole goal of the entire thing is just so that the underwriters, the carriers, the actuaries can get an accurate assessment of your risk.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

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