You may already know that your Experience Modifier (aka your “Mod”) plays an important role in the price you pay for workers’ compensation. You may have even found the line item on your policy and seen its direct impact on cost. But behind the scenes, the Mod has significant impacts on underwriting and other intangibles, which we will explore in this article. We’ll also discuss how important it is to review your Mod for accuracy.
What is underwriting and what do underwriters do?
An insurance policy is a contract which contains terms and conditions, just like any other contract. Underwriting is the process insurance companies use to determine if they want to do business with you, and if so, under what terms and conditions. Pricing is one of many policy terms and conditions. It’s the most visible and also the most frequently discussed of all insurance policy terms and conditions.
Automation is the future of underwriting in our industry, and workers’ compensation underwriting is no exception. Insurance companies are using data and computer modeling for underwriting instead of relying on humans. Computer software is being used to make decisions that humans used to make based on intuition and experience.
Yes, you are a number!
Here’s an old cliche you’ve probably heard: “you’re just a number.”
Underwriting files have transitioned from manila folders to 1s and 0s. Literally, you have become a number, or at least a whole lot of numbers. And your Mod is one of the really important ones. Because of this, it’s increasingly important to pay attention to your Mod.
Scheduled Credits = discounts
Scheduled Credits are a special discount that insurance companies add to workers’ compensation policies. You have to earn them – mostly through having a good claims record.
Insurance companies have guidelines on offering Scheduled Credits, and the starting point is often your Mod. For example, an underwriter can offer a lot of Scheduled Credits to an account with a great Mod, bringing the price down. Accounts with mediocre Mods may not be eligible for any Scheduled Credits at all, resulting in a higher price.
If your Mod is not correct, you might be missing out on Scheduled Credits. You could be missing big savings.
Eligibility: sometimes the insurance company just says No
Your Mod is often a pre-qualifier in the underwriting process. If your Mod is too high, an insurance company may not offer their best program. Sometimes, the insurance company won’t offer any quotes at all.
If there is an error in your Mod, it can mean you’ve missed out on that insurance company you really wanted to be with.
Review your Mod with us
To the extent that the underwriting process has become increasingly automated, the accuracy of your Experience Modifier has become that much more important.
Make sure your Mod is accurate, and make sure you get access to the best workers’ comp rates and programs. We’ll review your past Mods and also help you look forward to the future.
Call us for more information. We would love to review your Mod and your workers’ compensation policy.