JIf your job description includes any duties associated with Worker’s Compensation Insurance, you are aware that the premium you pay is adjusted by your Experience Modification Factor (EMF). The theory behind the EMF is simple: the formula compares your actual loss dollars (the numerator) to your expected loss dollars (the denominator). If your losses are better than expected, you receive a premium deduction; if claim results are worse than expected, you pay an additional premium. Your EMF changes every year, based on the most current data. Although simple in concept, the typical EMF formula contains 77 separate calculations, and 1 in 3 EMFs contains errors. Some of the more common errors are:
- Duplicate claim information
- Missing claim information
- Claims listed under incorrect states
- Incorrect payroll numbers
- Failure to include information from Owner or Contractor Controlled insurance plans (OCIP, CCIP)
- Arithmetical errors
- Incorrectly-coded claims (medical-only claims, for example, are discounted 70%)
It’s extremely important that you understand your EMF so that you can prevent paying too much premium. Here’s what you should do:
- Call your insurance agent and request a copy of your “NCCI” EMF worksheet, then have your agent review the worksheet with you in detail
- Correct any wrong information (you can go back as far as three years)
- Have your agent project your renewal EMF (this can be done nearly a year in advance)
- Meet with your agent and insurance company claim adjuster at least six months prior to your next policy renewal date. This is the time when your company’s data is submitted for rating, so you want to be certain claims are not “reserved” too high as this affects your EMF.
If you have any questions about your Experience Modification Factor, please feel free to contact one of Beehive’s “Mod Squad” for more information.