Determining How Your Ex-Mod Affects Your Premium
Your ex-mod is based on the number and severity of accidents your workers experience over a 3-year period. This period excludes the year before your current coverage expires. If your plan ends on January 1, 2020, for example, your ex-mod reflects the period between January 1, 2016 and January 1, 2019.
If you think of EHS as a sport (which it definitely is not, but the metaphor is useful here), your ex-mod is your running score. Like in golf, the lower your numbers, the better—and you don’t want to go above par (which would be 1).
Ready for some math? Fortunately, we’re working with easy numbers. If your industry’s manual premium is $70,000, the average company would have an ex-mod of 1.0, meaning they would pay $70,000 for insurance coverage:
$70,000 (manual premium) x 1.0 (average ex-mod) = $70,000.
But let’s say your competitor goes under par. They experienced fewer losses than the industry average, bringing their ex-mod down to 0.85. Now they’re paying less than $60,000 for coverage:
$70,000 x 0.85 = $59,500.
Imagine your company experienced more and/or more accidents than the industry average. Your ex-mod is 1.2, bringing your coverage up to $84,000:
$70,000 x 1.2 = $84,000.
Now let’s figure out the difference:
$84,000 (your coverage) – $59,500 (your competitor’s coverage) = $24,500.
And there you have it. That’s how your competitor paid for those billboards, or that YouTube series, or—yep—that Ms. Pac-Man cabinet.
If you suspect your company is missing out on low insurance rates (and bidding opportunities on eBay), don’t despair. Fortunately, your ex-mod is one factor you have control over. You can’t lower your manual premium, but you can lower your ex-mod. Over the next few weeks, we’ll show you how—and explore some ways you can build a culture of safety, reduce accidents, improve your reputation, and save even more money.
Don’t want to wait until the next article? See how you can start transforming your business today with a smart EHS compliance platform.