With upcoming changes to the Experience Modification or E-Mod calculation now taking effect we’ve been asked about how this action may impact certain contracting clients.
A great deal has already been written, in many different forums, about how the NCCI split point changes will effect an experience rated workers compensation clients E-Mod calculation. While raising the primary loss from $5,000 to $10,000 will have a significant impact on the experience mod calculation for most employers who have historically had claim frequency issues, it may have a different, yet more severe impact, on contracting clients seeking work.
In today’s world of contractors and workers compensation issues, you’ll find that most hiring parties, general contractors and their client owners, have established the E-Mod as a safety indicator of a contracting risk. With an E-Mod of 1.0 or below being the acceptable guide, most hiring general contractors and owners will make that a part of the qualification process when seeking to hire a subcontractor. Especially found in larger projects, the use of an E-Mod factor as a qualifier has, over time, become an important part of the hiring process.
For those contracting clients who have teetered on the edge of a 1.0 Mod Factor, the split point change may just be enough to have pushed them over. A contracting client who in the past may have come in at .96 may, after the change in their E-Mod calculation, now come in at 1.05+ or more.
And it’s this single action by NCCI that may prevent a contractor from qualifying for work or bidding on projects for their business.
These changes are out there now! Unfortunately many contractors who find themselves in this position may not be aware of the effect the split point change will have on their business until they receive their current Experience Modification Rate in the mail. It may actually be too late for some to do anything to make a positive impact on their upcoming E-Mod. But it’s not to late to work toward making improvements to your claim management processes and ultimately improvements to your future E-Mod.
So, especially if you are a contractor, pay close attention to your current E-Mod, monitor your recent workers compensation claims and don’t wait, ask a workers compensation consulting firm for a projection of your upcoming E-mod! Get ahead of these changes, work with a workers comp consultant and understand how they will effect your business!
Hope this helps you out! Thanks!
