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Stunning Workers’ Comp Survey Results Mean Opportunity for Agents and Brokers

Friday, March 16, 2012
Written By
Kory Wells

Over 3,500 employers recently participated in Zywave’s 2012 P&C Workers’ Compensation & Safety Survey. Overall results will interest employers and work comp professionals alike, but if you’re an agent or broker, I think the results of just one question should particularly command your attention.

2012 wcsurvey states
Over 3,500 employers from across the nation responded to the survey. This graph shows their distribution by state where they reported the highest number of employees.

First, a little demographic data about the survey participants: The employers represented are well distributed across the nation and come from 20 business sectors, with heaviest representation from manufacturers (17 percent), health care and social assistance providers (15 percent), and construction (13 percent). Survey takers identified themselves as human resource personnel (36 percent), finance staff (19 percent), CEOs or presidents (16 percent), and other staff, including safety managers, risk managers, and operations directors. Some 57 percent of those participating reported workers’ compensation premiums under $50,000 annually.

For the first time in this annual survey, we asked respondents some specific questions about experience rating. Of those responding, 5 percent said they were not experience rated, and 28 percent said they didn’t know if they were experience rated. Since very small companies are often not experience rated and some respondents reported the majority of their operations in the few states that don’t experience rate, these numbers don’t seem unreasonable.

But then. For those who reported that their companies were experience rated, we asked:

Do you know the value of your company’s minimum mod (also known as “loss-free rating”)?

2012 wcsurvey lossfree
How employers responded to the question: “Do you know the value of your company’s minimum mod (also known as ‘loss-free rating’)?”

A whopping 88 percent either did not know the value of their loss-free rating (31 percent) or indicated they were not familiar with the term (57 percent).

88 percent!

Kory, you may say, maybe these just weren’t the right people to be answering that question. And that’s what I wondered at first, too. But these same people – to be precise, 95 percent of those who reported being experience rated – were able to indicate the value range of their most recent mod.

So these employers knew they were experience rated and they generally knew their mod value. In many cases they even said they were using mod analysis to drive improvements in safety culture and programs, injury management, return to work programs, and more. But they were clueless about their loss-free rating, and that, my friends, means there are many, many opportunities out there for you in prospecting and retention to:

  1. Communicate what the loss-free rating or minimum mod is. In case you’re new to experience rating, it’s the value the mod would be if no actual losses occurred in the experience period.
  2. Calculate the loss-free rating for the prospect or client. The loss-free rating is shown on the California experience rating worksheet, but in other states you’ll substitute zeroes for actual losses in the applicable mod formula, or (shameless self-promotion alert) let software like ModMaster show you the value.
  3. Make the connection between mod points and premium. Multiply the loss-free rating by the estimated manual premium to grab a prospect’s attention or remind a client how low their premium can be.

Sample dialog between a broker and prospect: So you were pretty happy with your mod of X? (Lots of employers are satisfied if their mod is near 1.00.) Are you familiar with the loss-free rating? Do you know how low your mod could have been? Can we sit down together and see how much premium you could have saved if you were at your minimum mod?

Go forth, have those eye-opening conversations, win that business! And as usual, your comments and questions are always welcome.

– Kory Wells, WorkCompEdge Blog Editor

© 2012 Zywave, Inc.  All rights reserved. For reprint permission, contact the blog editor.

For more about the survey, read:

For more about the loss-free rating, read:

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