Understanding Your E-Mod

Do you have a low Experience Modification Rating?
What's your Maryland Workplace Safety Training score?

Quick Summary:

The Experience Modification Rating or "E-Mod" is a valuable Maryland workplace safety incentive factor that is directly related to the losses incurred during prior policy terms. An experience modification of less than 1.00 will help decrease your final premium. An experience modification of greater than 1.00 may increase your final premium.

New business with Chesapeake Employers becomes eligible for the E-Mod rating plan at the end of the second policy term provided premium for the period is $3,000 or greater. In some cases, the NCCI modification from a business' prior policy may be considered.

Understanding how workplace safety and your "experience modification rating" are key to reducing your insurance premium costs

Detailed explanation:

Workers' comp calculation similar to auto insurance

Everyone understands that those with bad driving records can be charged more for auto insurance than are those with safe driving records. Simply stated, safe motorists are rewarded with lower premiums. The same principle applies to workers' compensation.

In the same way, you can reduce your workers' compensation premiums by making safety a priority in your workplace. Therefore, the lower your losses are, the lower your premium calculation may be. (Note: For purposes of this explanation, "losses" here equal claim dollars paid and reserve dollars set aside.)

The key to reducing your premium is your "E-Mod"

The key to lowering your cost of workers' compensation insurance premiums is through your "experience modification rating," known more commonly as the "E-Mod." In the workers' compensation world, "experience" reflects your claims history as compared to those of other companies in your industry (for example, construction) and, more specifically, in your classification (for example, drywall).

Other factors used to calculate your workers' compensation insurance rates include payroll information and classification codes. Class codes are derived from recent data that reflect the inherent risks and average losses of all insureds in a given occupation. These factors usually remain fairly constant. But your experience rating modification will change to reflect your company's particular amount of losses over a certain period of time.

Premiums are adversely affected if your losses are worse than average. Conversely, premiums are positively impacted if your loss experience is better than average.

"Experience rating," then, is a factor that is calculated for each business using claims and payroll data from the three most recently completed years. For example, to determine a 2010 e-mod factor, payrolls and claims data from the rating period of 2006, 2007, and 2008 would be included. The rating period does not include the year 2009 because your loss data from that year would be too new to properly represent that year's experience.

The following factors from your safety record determine your experience modification rating:

  1. Number and frequency of accidents. A business with one $25,000 claim will fare better than the business with five $5,000 claims. Frequent claims point to a pattern of poor workplace safety.

  2. Cost of accidents/claims. Each claim's incurred losses (paid claim costs plus reserves) are calculated.

  3. Size of your business. Business size is a stabilizer, so the employer with few employees is not unduly penalized.

Being accident-free means bottom line savings

Chesapeake Employers experience rates most of our policyholders with average losses at 1.00. If your experience is better than average, your rating will be below 1.00. Conversely, an experience rating greater than 1.00 indicates higher-than-average losses. (See Premium Calculation Example for how a higher or lower experience modification rating can negatively or positively affect premium amounts.)

Rating plan eligibility

New Chesapeake Employers' business becomes eligible for the rating plan at the end of the third policy term year, provided premium for the three-year period combined is $3,000 or greater. This is a unique Chesapeake Employers' benefit for smaller employers, as our competitors set their rating plans' baseline threshold at $5,000 per year. In some cases, the NCCI modification from a business' prior policy may be considered.

The best way to achieve a favorable experience rating is to:

  1. Be free from accidents.

  2. Minimize your losses.

  3. Report all injuries immediately to Chesapeake Employers. Chesapeake Employers' research shows that the sooner the injury is reported, the lower the claim cost.

  4. Establish a return-to-work program.

Helping you prevent occupational injuries is our ultimate goal. The bottom line is that you can save money – and lives – simply by focusing on Maryland workplace safety training.

If you have additional questions about your experience modification, please contact your agent partner or your partner in the Chesapeake Employers' Underwriting Department. If you need assistance with your Maryland workplace safety training programs, please contact the Chesapeake Employers' Safety Services Department by calling 1-800-264-4943.

Warning E-Mod Fraud

Our goal is for all policyholders to pay a fair premium, no more and no less. All Chesapeake Employers' policyholders who qualify for E-Mod calculation are subject to the application of either credits or debits. Unfortunately some businesses try to avoid a high E-Mod and paying the resulting debit cost by misrepresenting their business operations. We are aggressive in training our professionals and agent partners in spotting E-Mod avoidance fraud. We are aware of all the tricks and potentially fraudulent acts that some businesses try to commit:.

  • Changing their business name (closing and reopening);

  • Changing owners/officers of the company;

  • Trying to pass themselves off as a different company; and/or

  • Paper sale of the company to make it appear that the operation has changed.

Intentionally misrepresenting your loss history or business operations in an attempt to avoid paying your proper premium is against the law. Chesapeake Employers has a zero tolerance for E-Mod avoidance fraud. We will cancel the policy of any business that fraudulently tries to avoid a higher E-Mod and we will aggressively pursue the debt.

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Chesapeake Employers' Insurance Company •  Formerly the Injured Workers' Insurance Fund • 8722 Loch Raven Blvd. • Towson, MD 21286   410-494-2000  1-800-264-4943   Privacy Policy and Data Security