Insurance Consultants Of Maine Newsletter

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If your workers' comp premium is over $5,000 you have an experience modification as part of your premium calculation.

Simply put, your experience modification is the ratio of your actual losses to the losses expected of an employer like you. The calculation considers your employment classification and your payroll in the comparison.

A mod of less than 1.00 means your losses are smaller and less frequent than average. A mod of 1.00 and above means that you are average or above average.

The lower the mod, the lower your premium. Work comp policy premium is determined by multiplying your payroll by the rate per $100 your insurance company charges. The resulting number is multiplied by your experience mod.

If your mod is .85 you are saving 15% on your premium. Conversely, if your mod is 1.15 your paying an extra 15%.

The dynamics of the experience modification means that most employers end up paying their own losses over time. When your losses go up, your premiums go up. I have shown countless employers the impact a specific claim has on the premiums - they are shocked to see that the ultimate premium cost of a loss many times exceeds the cost of the claim.

Some insurance experts equate an experience mod of 1.00 with a "C" on a school report card. It's not a bad comparison - a mod of 1.00 is "average." Who wants to be average?

The true focus should be on your "perfect mod." Perfection comes with no losses. For some companies the perfect mod is .65. For others, it may be .72. Every employer's perfect mod will be different. Your focus should be how far off is your mod from the perfect mod based on your classifications, payroll and losses.

The difference between your perfect mod and your actual mod is the part of the factor that you control. If your perfect mod is .55 and your actual mod is .95, then you control .40 of your modification factor. Said another way, your losses are responsible for the .40 increase in your factor.

If we multiply your controllable mod by your premium we can see how much your losses have contributed to your premium increases.

Call me to discuss your experience modification. I can provide a report that shows your perfect mod and calculates the true premium cost of your losses.

Join me for an in depth discussion of the experience modification on April 21 for 9:00 AM to 9:45 (Eastern). You'll learn what goes into your mod, how to figure your perfect mod and some tactics to control your modification and, ultimately, your workers compensation premium.

Insurance Teleseminars For Bankers - I'm holding a series of four teleseminars designed to provide bankers with useful insurance information and advice. The next session is April 20th. More info can be found at http://www.InsuranceFixer.com/bankseminars06.html.

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Remodeling Magazine Article Features My Comments - Check out the recent issue of Remodeling magazine. See http://www.remodeling.hw.net/industry-news.asp?articleID=280623 for the piece.

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Work Comp Experience Mod Teleseminar - April 21st -- Learn what you need to know to control your workers' compensation premium - http://www.InsuranceFixer.com/Teleseminar-mod.html.

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Life In Maine And Other Stuff - Spring is coming - even though we had snow last week!. The trees are budding up and the trails behind our house are showing signs of deer, moose, and turkeys moving around. The longer days are great.

I've mentioned my Rotary Club a few times in this space. Last month we held our big fundraiser for the year, a TV auction that raised $40,000. Hard work by a lot of people paid off. Now we'll have money for scholarships, exchange students, our work for literacy, polio, water treatment, international projects, and all of our other activities that help the community - in Maine, the US, and internationally.

Biggest Insurance Mistakes White Papers - Get my white papers covering the biggest business and personal insurance mistakes. Send a blank email to bizmistakes@InsuranceFixer.com for a copy of the business mistakes paper. Email to personal@InsuranceFixer.com for the personal insurance version. No cost.

Your Privacy - I will never sell or distribute your email address to any other person or organization.

Do You Have The Right Insurance? Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Call 207.284.0085 or email me at Scott@InsuranceFixer.com. Remember, I don't sell insurance so I'm unbiased.

Insurance Consultants of Maine, Inc. is an unbiased, fee-only insurance and risk management advisory firm. We don't sell insurance and never accept fees or commissions from insurance companies or agents.

Comments regarding insurance policies or products in this newsletter do not constitute an endorsement. I accept no fees or payments of any kind from any company mentioned in this newsletter.