Experience rating attempts to adjust your manual premium
(which is simply your payroll by class code multiplied by "manual" rates) to reflect
your actual claims experience. Without this adjustment, all companies of
the same size in the same industry would pay the same premium. The effect
of experience rating is to adjust your manual premium up or down, since
your claims experience is either "better" or "worse"
Where does this
information come from?
The data feeding
the calculation comes from two sources: your audited payrolls and your
actual claims experience. Claims experience is reported by your current or
previous carrier each year for three years by way of "unit statistical
data". This data is reported electronically to the appropriate rating
organization (NCCI, if you have multi-state operations and/or individual
state agencies such as the Workers' Compensation Rating & Inspection
Bureau of Massachusetts).
What can we do
to reduce our experience modification factor?
By investing in loss control programs and activities that
serve to reduce your claims frequency, you'll have fewer claims. How much
should you spend? Let us provide you with a cost/benefit analysis that
will let you know what your return on investment should be.
How can we
predict our experience mod?
Don't wait until you receive your renewal quote or, even worse, your renewal
policy, to know what your mod will be. You know what payrolls you are reporting
to the insurance company after your current policy expires. Be sure to retain a
copy of your final payroll audit each year.
How can Chartwell help us with this?
As a Chartwell client, we retain a copy of your payroll
audit results at the end of each policy year. And, we order loss runs
with the appropriate valuation date. With this information in hand,
we're able to calculate your experience mod more than five months in
advance of your next policy anniversary. To examples of how much more
useful our client reports are than standard "bureau" reports,