730 DAYS WITHOUT A WORKERS COMP CLAIM: The Uncanny Ex-Mod A single factor to control workers' comp costs.

• Date: 01 August 2022
• Author: Dewalt, Sean

Workers' compensation has existed in Alaska since 1915, but it was not until 1946 that it became compulsory in the state. Workers' compensation insurance generally gives employers immunity from lawsuits in exchange for covering their employees' medical costs, missed work, and other expenses related to on-the-job injuries. The employee is not required to prove fault to collect. These no-fault social contracts made the employer liable for work-related injuries and disease regardless of fault.

Part of determining how much premium an insurance carrier will require for a workers' comp policy is the Experience Rating Modification Factor, or Ex-Mod. Insurance carriers use Ex-Mod to describe both past injuries and future risk, which allows carriers to calculate premiums based not only on industry average experience but on each business' unique operations. This mathematical equation is complicated and often misunderstood but can be best described using this formula: experience modification equals actual losses divided by expected losses.

Since 1947, Alaska has been a member of the National Council of Compensation Insurance (NCCI), which gathers data, analyzes industry trends, and prepares objective insurance rate and loss cost recommendations to insurance carriers. NCCI also creates individual Ex-Mods based on several factors including the payroll of the business, a loss analysis over the last three years, and the class codes for the work being performed. So how can employers reduce these...