Every broker wants to provide clients with accurate coverage at a premium that doesn’t break the bank. Usually, your job is to find the insurer with a risk appetite that matches your client’s history and help your client work towards a future with lower claims.
One way to keep premiums lower and ensure your client has the most options available is to spot and correct errors on their Ex Mod report. When unreported, errors on Ex Mod reports can lead to higher premiums with no justification.
You can work together with your client to correct both current and previous Ex Mods. Providing this service adds demonstrable value to your client offering — and stops your clients from seeking out a new broker.
Let’s walk through the correction process step-by-step.
When to Look at Your Client’s Ex Mod Report
If you aren’t already reviewing your client’s Ex Mod, then you absolutely should be. Clients get one free copy of their ex mod worksheet per year — they should use it!
You should review your client’s Ex Mod each year after the state publishes their worksheet. However, an annual review shouldn’t be a big moment for your relationship. You want to look at the Ex Mod worksheet before it comes out to spot any errors. Once published, the waiting period for correcting discrepancies can be lengthy.
More importantly, you should be going over any data during your monthly or quarterly claims meetings. Your end goal should always be to submit data that is as accurate and up-to-date as possible to avoid any outdated or incorrect data making its way to the insurance board.
In an ideal world, you should only be scanning your client’s Ex Mod report for typos or errors made by the state insurance group — not data issues created by you or your client.
Remember: Being proactive helps you provide better service. How aggressive do you need to be? Insurers report historical info to NCCI six to eight months into the policy. Any changes to reserves or claim closings in the final four to six months of the policy won’t be reflected in the new Ex Mod.
Review the historical info and push for changes BEFORE the insurer sends information to the NCCI.
Three Documents You Need to Find and Correct Ex Mod Errors
What do you need to ensure you have an accurate Ex Mod Worksheet?
The good news is not much. In addition to the Experience Modification worksheet, you need:
- Updated loss runs. Do make sure all loss runs are currently valued (within a week).
- Client class codes for all the years you intend to examine.
- Premium audits completed by the insurer. Compare these with payroll on the Ex Mod sheet. (Use your client data if it’s what you have on hand, but the audits are the best source of information.)
And of course, you’ll need a good calculator.
If your client is in construction, use the Contracting Classification Premium Adjustment Program (CCPAP) application, too. The CCPAP is a credit available to contractors who pay more than the state’s average wage. It prevents contractors from having high premiums because they pay well rather than because they have more workers.
The CCPAP credit is available in 15 states, including New Mexico, but you won’t find it in California or Texas.
Check for the Most Common Ex Mod Report Errors
Ex Mod worksheet errors come in all shapes and sizes. They can be small typos or huge omissions. (Some companies even have an Ex Mod when they actually don’t qualify.) As you know, moving a decimal point makes a huge difference in the insurance world.
The most common mistakes are calculation errors:
- Payroll calculations
- Expected losses
- Close claim amounts
- Reserves on open claims
However, you may also find class code errors, too. You should verify all class codes before submitting any documentation. Getting it all correct on the client’s side minimizes the likelihood of calculation problems making their way onto the final Ex Mod Worksheet.
What to Look for to Prevent Errors and Outdated Information
How do you prevent errors in the first place? We have a few tips.
- Pay special attention to closed claims. Make sure the Ex Mod worksheet reflects the accurate amount of each claim.
- Grant the same attention to reserves on open claims. Reserves count against employers as an actual loss, so avoid over-reserving. Initial reserves can push a mod up even if it comes in at a lower Ex Mod.
- Be aware of the loss valuation date and make sure every claim is closed before the date and before submitting the files. Don’t be afraid to ask the adjuster to close claims before the loss valuation date.
- Determine whether Loss Adjustment Expenses are correct and then omitted from Incurred Losses. Insurer’s expenses don’t belong in the client’s Ex Mod; flag these early.
There are some glaring but less common errors that the state or insurer may sometimes tack on. For example, in rare cases, an error may mean your client gets charged for claims that belong to another insured. Make sure every claim on the report is also on your client’s loss run.
How to Correct Your Client’s Ex Mod
You spotted an error, and you want to correct it for the record. How do you go about it?
The process is straightforward if occasionally prolonged due to bureaucracy.
All you need to do is write to the state’s workers compensation division (or bureau) with a note on the error and proof of the correct information. The bureau will then assess your claim and the proof you provide. If the state accepts the error and correction, the bureau will then re-rate your client.
Keep in mind: your client may or may not get a different Ex Mod.
You may also find an error that doesn’t improve your client’s Ex Mod and lower their premium. You may even encounter errors that damage your client’s Ex Mod and contribute to higher premiums. You still must correct any error.
Once the Ex Mod Worksheet is correct, the bureau will notify your client’s insurers. You should also receive a copy of the correct paper and then pass it on to the client.
More Ex Mod Resources to Improve Your Processes
Explore exactly how the Ex Mod works to strengthen your understanding and get better rates for your clients. Apply your expertise across your book of business by regularly reviewing your clients’ Ex Mods late in the year and strategizing areas of improvement.
Foresight underwrites workers compensation policies for clients with high Ex Mods. With Foresight’s proprietary risk management technology deployed, your clients can start running their ideal safety programs, improve incident response, and lower their Ex Mod faster. With competitive pricing upfront, Foresight offers unparalleled value for your complex risks.