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As an attorney that represents employers and insurance carriers in Iowa workers compensation cases, I am often asked questions about the effect of a settlement, a decision from the Commissioner, or the effect of a decision being made by an insurance carrier. During my conversations, employers often mention or talk about their experience modiciation factor, or "mod factor," when discussing their worker's compensation claims. In discussing this issue with employers, I get the impression that most employers have a general idea of the factors involved in the calculation of their "mod factor" buit are not entirely sure how to manage or control their mod factor.
Indeed, probably all employers should be concerned about and monitor their mod factor. The mod factor is the calculation performed to determine the employer's loss ratio. The mod factor determines whether the employer is "penalized" or "rewarded" in their worker's compensation premiums based on their loss experience, wage basis, etc. There are some clearly relevant factors involved in the calculation of the mod factor and some measures that employers can take to reduce their mod factor and control their worker's compensation premiums.
However, in order to manage its mod factor, every employer should understand the factors used to calculate the mod factor and techniques that the employer can use to reduce the mod factor. I have located a few good articles that can help employers understand, monitor, and manage their mod factor. I recommend that employers visit this article by Watson Insurance Agency, Inc. This article by insurance consultant, Scott Simmonds, also provides some good insight. I would also recommend that employers review this article by Sam Martin. It should be helpful to employers desiring additional information about means to reduce their mod factor. Finally, a link and explanation of the experience modification factor from the organization that actually calculates the mod factor to better help employers understand the mod factor.
Posted by William H. Grell on February 25, 2008 10:17 PM
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