By Eric Schmitz
Vice President, EHS Products
November 3rd, 2014
What we measured:
KPA continues to provide both Loss Control and compliance services to dealerships and related industries throughout the Country. In providing these services to over 5,000 business locations KPA has been able to gather data that provides insight into the true Return on Investment, (ROI) of Safety.
For purposes of this study, KPA looked at a random sampling of 420 KPA clients in the state of Florida. We obtained Experience Modifier data on these 420 locations through the National Council of Compensation Insurance (NCCI) and analyzed this data going back 10 years, or for as long as they had been KPA clients, whichever was shorter. This data was then used to determine the effect of KPA’s services for new clients on Experience Modifiers (Learn more about Ex-Mods in this short video). KPA conducted a similar study in 2013 for the State of California which yielded similar results. The States of California and Florida were chosen due to their large business base which helps provide the largest sample size possible.
New KPA Clients Save
Since your Experience Modifier is calculated over the last 3 years of accident data, we had to look back at least 3 years to measure the average client benefit from KPA services. The chart illustrates the average KPA client that has been on our services for one year or less has, as you would expect, an industry average Ex-Mod of 1.01. Within 3 years that Ex-Mod drops to an average of 0.9, providing a 10% premium discount and after 5 years the Ex-Mod drops even further.
What is an Experience Modifier?
Your business has a Workers Compensation Experience Modifier (Ex-Mod) based on the losses your facility has had over the past 3 years. The modifier factors both severity and frequency of losses and is set in any given industry so that the average business has an Ex-Mod of 1.0. Your businesses Ex-Mod is multiplied by the insurance carrier’s premium rate to determine your actual premium. So a business with an Ex-mod of 0.85 receives a premium discount of 15% while a business with an Ex-Mod of 1.25 receives a 25% premium surcharge.
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