Why did my Workers Comp Experience Modifier go up when I had no claims last year?
For Oil & Gas insurance clients, the Experience Modifier is one of the most important factors in determining the cost of their Workers' Compensation premiums. There are two key points in understanding how the experience modifier is calculated.
Firstly, it is important to remember that this immediate past year’s losses are not included in the calculation of a company's experience modifier. Only the 3 years prior to the past year.
Secondly, The Texas Workers’ Compensation system has been working so well, with the reforms implemented over the past 20 years, that Workers’ Compensation rates in Texas have been reduced several times. Now rates are so low that the Experience Modifier mathematical formula must “expect” less in losses. This expectation of fewer losses makes earning a good E-Mod more difficult. So, even with no new losses, the formula that now contemplates fewer loss dollars and so gives more weight to the past losses that were included in prior years.
What is the take-away? Make sure that you have access to the expertise and resources to manage your risk and help you get the lowest rates possible. Contact one of our Oil & Gas insurance specialists today.