Yet another reason the MOD shouldn’t be used as a bid qualifier.

I was recently working with a company who was quite upset seeing a jump in their experience rating from an auto accident they were not at fault for. The accident involved an employee driving in a company vehicle to a jobsite. In every state, Workers’ Compensation is the primary carrier. That means, comp pays first. So in the case of an auto accident, if an employee of yours is injured while working, the workers’ compensation policy will pay first for the injured employee’s injuries (after medpay on the auto where applicable). In a severe accident, medical bills can quickly add up. Add a $100,000 workers’ compensation claim to most experience mod’s and will likely see a noticeable jump in the experience rating when it hits!

There is a silver lining. Should the claim get subrogated and the workers’ comp carrier is returned some or all of those funds paid on the claim, the MOD’s will be adjusted. The bad news is this could be several years after the accident, and after you may have already lost jobs due to the high mod, run into difficulty in the insurance marketplace finding competitive rates, etc. While the direct costs of the experience MOD will be returned if subrogation was successful, the indirect costs are unfortunately not recoverable.

The point is, take extreme caution when looking and bidding jobs when the experience MOD is a factor and be aware of how the experience MOD can impact in more ways that you might typically think. Are you competitors using the same qualifying factors? Is the prime contractor aware of the possible different rating factors at play? Were any of the claims that brought your rating above a 1.0 out of your control or not the fault of your company or your employees?

Also, be sure to stay on top of your claims. Subrogations can take time and if you’ve made changes in carriers or agents over the years, you may need to bring everyone up to speed to get the assistance you need to make sure you at least recover some of excess premiums paid!