Take Control of Your X-Mod

The Experience Modification(x-mod). Without a doubt one of the most significant impacts you can have on your overall insurance costs and often one of the most overlooked pieces as well. Year after year insureds will look forward to the tree care class code(0106) going down due to the industry getting safer. For example, over the last few years, the rate in Wisconsin has decreased from around 12% of total payroll to just under 10%. That is almost a 20% decrease! Sorry to the folks in other states dealing with higher rates, BUT, there is a way you can impact your worker’s compensation cost by more than 20% and that is by taking control of the experience modification.

What is it? 

 The experience modification looks back at your last 4 years of worker’s compensation experience and disregards the most recent year to allow time for claims to develop/close out. See example below for 2021 experience modification:

The rating, which is typically below, at, or above 1, is essentially a comparison of your business versus the insurance industry’s expectations for a business in your class code. If you’re below one, you’re doing better than the average tree care company and if you’re above one, you’re doing worse than expected. That number is then multiplied by your overall premium to calculate your worker’s compensation cost.

What does it look at?

We must first understand what the experience modification looks at in order to take control of it. In short, the mod looks at three major areas:

1. Company Size and Class Code

Larger companies will have more payroll and therefore more potential for lower x-mods. If your company has $2 million in payroll and only has 1 $5,000 claim, your experience modification will be lower than a company who has $200,000 in payroll and also has 1 $5,000 claim with the same class code.

2. Frequency Vs. Severity

Per the National Council on Compensation Insurance(NCCI), the x-mod calculation recognizes that the cost of an accident is much less predictable than the fact that an accident happened in the first place so frequency impacts the x-mod more than severity. I.E. 10 small claims of $5,000 would impact your x-mod more heavily than 1 big claim of $50,000. 

3. Claim Status

In the past you may have heard us reiterate the importance of getting your employees back to work as soon as possible. I encourage you to check your state’s specific rules, but oftentimes you can get your employee back to work on light duty to avoid the claim becoming a “lost time claim”. The x-mod reduces medical only claims, a claim where the employee does not receive lost wages and only has medical bills paid for, by 70% in comparison to a lost time claim. 

It also looks to see whether a claim is still open or not. Open claims will impact your x-mod at a higher rate than closed claims. Be sure to follow up with your work comp carrier to ensure that claims are getting closed out on time.

What Can You Do?

Managing your x-mod can obviously be a very detailed task. Work closely with your agent to ensure you’re doing the best you can based on your claim history. Below are a few quick pieces you can look at to control your x-mod as best as possible.

1. Implement a safety program, including regular safety meetings.
2. Start a safety committee
• It may be helpful to have specific members of your business responsible for the x-mod rating. An x-mod rating is a good way to measure the effectiveness of your safety committee.
3. Injury Reporting/Return to Work Program
• Claims don’t always happen often. Your company NEEDS to have an injury reporting program so employees and staff know what to do in the case of an injury. On top of that, you should have a light duty program to give to the doctor detailing what kind of work is available to the employee if they are on restrictions.
4. Accident Investigation
• Having an accident investigation program is particularly helpful for mitigating the number of claims. Make sure your staff is reviewing the what and why for accidents so you can prevent them from happening in the future.
5. Claim Management
• Have someone in your office responsible for managing injuries after they happen. Make sure all the information is shared with your work comp company and that the employee is back to work as soon as possible. Again, make sure the claim gets closed out once everything is settled.
6. Annual Review
• Especially if you are a larger company, make sure you are reviewing your x-mod with your agent at the end of the year. This is a good way to make sure you’re on top of any claims that did occur and nothing slipped through the cracks. 

Some of the best experience modifications I’ve seen are as low as .70. As you can probably tell, the companies with lower x-mods also get better rates and potential for better dividends. That means you’re looking at more than a 30% discount on your overall worker’s compensation costs! If you have any questions on how the experience modification works, or questions regarding your rating specifically, feel free to reach out to an ArboRisk team member. There are also some good resources detailing the experience modification calculation on the NCCI website. Thanks for reading and good luck getting control of your x-mod!

4 Ways to Lower Business Auto Insurance Costs

Since joining the insurance industry in 2016, auto insurance has overshadowed many of the other insurance lines due to its rising costs and inconveniences brought to the insured. Whether it is from trouble adding a vehicle due to its value/size, or difficulty adding a driver due to their record, it is easy to feel as if you’re at the mercy of the insurance company without actually having any control over your auto insurance policy. On top of that, the rising costs of vehicles, increasing number of accidents, and even the increase in amount of natural disasters are all contributing to rising auto insurance costs. However, there are still a few ways you, the insured, can take control of your own auto insurance costs.

1) Driver Management-Pre-Hire Screening, Training, MVR Review
a. Pre-Hire Screening – Hiring good drivers is critical to not only having low auto insurance costs, but having your company properly represented out on the road. Make sure you have a formal hiring process including job descriptions, formal interviews, background checks, and MVR guidelines.

b. Your company should also have a safe driving test that drivers need to pass in order to drive in your fleet. You’ll want to have an exam for each type of vehicle. At minimum a test should include: pre-trip inspection, starting, stopping, turning both directions, backing up and parking, etc. however, you may also want to include trailer attachment and/or permanently attached equipment operation (aerial lift, dump body, etc.).

c. Make sure your potential employees sign an MVR authorization form and that you’re running their driving records prior to hiring them. These should also be ran annually or even semi-annually for review. For general MVR guidelines, reach out to an ArboRisk representitive.

2) Fleet Management-Vehicle Inspection, Usage/Storage, Compliance
a. I’m sure you’ve heard the horror stories of a hitch breaking out on the road resulting in an unleashed chipper/trailer heading towards a third party vehicle. Think Final Destination. Point is, have a formal pre/post trip vehicle inspection program to make sure everything is in order before and after the vehicle hits the road. Good maintenance will also help avoid vehicle downtime in the future.

b. Consider having a formal usage policy in your employee handbook or fleet safety program. This will help avoid employees driving company vehicles off the job and causing unneccessary accidents. The way vehicles are stored is also important. Think about spreading your fleet out as much as possible in case there is something like a fire/natural disaster at your location.

c. I’d recommend having someone in your company that is in charge of compliance. Think about your state’s DOT laws, along with any other state you may operate in. Insurance companies will run reports that will give them a background on any compliance issues which may impact your overall costs.

3) Telematics/GPS
a. Fleet telematics systems are growing in popularity, as they allow the insurance company to get a more accurate picture of how the vehicles are being used and how the drivers are operating. A good telematics program would allow the business owner to see where vehicles are at all times, any speeding incidents or sudden stops, distracted driving, and even vehicle issues. Ask your carrier directly if they offer a telematics program and if there are potential discounts for implementing it. You can also look at cell providers like Verizon or AT&T, as well as directly to third party providers.

4) Insurance-Present Safety Material, Deductibles/Physical Damage, Value
a. Once you’ve worked hard to put these safety measures in place, make sure your agent and insurance company know what you’ve done. The ability to show an insurance company these written measures will surely help you get better auto rates.

b. Ask your agent what options you have for vehicle deductibles and physical damage coverage. For older vehicles, you may want to consider self insuring and not paying for physical damage coverage. For larger vehicles, it may help your overall cost to increase the deductible as high as $5,000 or whatever you feel comfortable with. As Eric always says, there is nothing wrong with self insuring, you just want to know what exactly you are self insuring.

c. Vehicle value has a significant impact on your insurance cost. Some insurance companies may not be comfortable insuring large vehicles such as knuckleboom cranes. Check with your company prior to purchasing a big vehicle and make sure you’re considering the value to the cost of insuring the vehicle.

As I mentioned, the technology in vehicles is constantly improving which in turn leads to higher costs of repair. What used to be a small fender bender can now lead to needing a new blind spot monitoring system. Although that may be out of your control, there are still many ways to directly impact your overall insurance costs. Driver and fleet management will not only help with your direct insurance costs, but your indirect costs such as vehicle downtime, and unnecessary maintenance costs.

Working with Your Insurance Agent

 “What do you need to make this change?”  “Do I pay you or do I pay the company?” “What do I do in the event of a claim?”   

These are some common questions you may have for your insurance agent.  As a tree service owner you are already busy with hundreds of tasks each day and insurance questions can be just one more thing to make you stress out.  That is why it can be helpful to know the best way to work your insurance agent. 

Here are some helpful tips that can make working with your insurance agent a smooth process:

1) Don’t Be Afraid to Ask.  I often hear “this may be a stupid question…”  It may sound cliché but there is no such thing as a stupid question.  As licensed professional insurance agents, we are here to help you.  It is much better to ask a question regarding coverage before something happens than asking after an incident occurs.  

2) Be organized when calling/emailing.  Agents understand how hectic your days are and how many different directions you are being pulled.  However, when reaching out to your agent know why you are calling/emailing and what you are asking.  Being clear in your request will help your agent be able to answer your question in a timely and accurate fashion

3) Be detailed.    If you are calling/emailing to add a piece of equipment or vehicle, make sure you have the proper information.  Typically an agent will need year, make, model, serial number or VIN, and value to add a piece of equipment or vehicle.  Having the title or a picture of it will help make sure that info is readily available.  When adding a driver, an agent will typically need name, date of birth and driver’s license number and state.  Having this information will save unnecessary back and forth.  

4) Open and Honest. To go along with being detailed, it is extremely important to not omit details that may change your coverage need. Many insurance policies are specifically written for the business operations that were initially declared. If you begin offering a new service or start working in another state, you need to discuss that with your insurance agent to make sure the coverage you think you have is actually there. 

5) Claims.  Claims are never fun and can often be unnecessarily stressful.  When a claim does happen, start by taking a ton of pictures. Claims can get your mind going in a million different directions, so the pictures help you keep the facts straight and give the adjuster the proper idea of what happened. Of course, being prepared before you need to file a claim is best. Click here  to read an article on how to be prepared for an accident or injury. 

6) Be Patient.  My number one priority as an insurance agent is to help you, the customer.  However, we don’t always have the answer right away and sometimes we are at the mercy of the carrier when getting these answers.  Keeping in my mind we are here to help, a little patience can help keep a situation from getting frustrating.

All insurance agents strive to provide the best service possible to their clients.  Remembering these helpful tips will help foster the important relationship between service agent and customer. ArboRisk specializes in the tree care industry, helping tree services of all sizes become extraordinary. If you are continually trying to explain what you do to your insurance agent, reach out to an ArboRisk team member today and feel the difference of working with an agency that truly understands what you do. 

What to do When an Accident Happens

Have you ever asked yourself; does my team know what should be done onsite immediately after an injury or accident occurs?  Have you ever asked yourself; does my team know what should be done onsite immediately after an injury or accident occurs? 

 Fortunately, the vast majority of tree care companies do not experience frequent injuries and/or accidents, however, when an accident does occur, chances are it will be a severe one. Because they don’t happen often, most tree services are unprepared to handle them correctly, causing unnecessary confusion and panic in an already stressful situation. In fact, we typically see the safest companies having more issues when an accident occurs, because they have not had to deal with that situation in quite some time or have focused their training on accident prevention and not response. 

So our tip this week is about Accident Preparedness and I’ll start by asking you if you can answer any of the following:

Do your employees know what to do when an accident occurs?

Do your staff have specific training on what to do when an accident occurs?

Do any of your employee have allergies to certain medicines?

Do your employees have any pre-existing condition that you’re unaware of?

Do you have a relationship established with an Occupational Health Clinic?

If you can’t answer these questions or don’t have the information readily available, whether in your office or onsite then, keep reading so you can better be prepared before an accident occurs.

1. Job Briefing – Requiring all crews to hold a job briefing prior to commencing work is the best way to ensure an accident is handled appropriately. Of course the job briefing should outline the scope of work, but should also address what to do if an accident occurs. Who will call 911 and wait for the ambulance? Who will administer first aid? Are there any specific medical conditions that this crew may have? Where will an injured employee be taken? It is easy for this step to become monotonous at every job, so work with your team to stress the importance of this. 

2. Create Easy to Follow Steps – Within in truck, there should be an envelope or packet of information with easy to follow steps on what to do in case of an accident. Label this packet clearly with the following categories: Supervisor/Crew Leader; Injured Employee; Medical Provider. Under each category have no more than 5 steps to ensure everyone knows what to do immediately while still at the jobsite. 

3. Paperwork – Ensure all appropriate forms are readily accessible for all team members to complete at the jobsite. At a minimum, this should includes an Injury/Accident Report, Accident Analysis and Physical Capabilities forms. 

4. Post-Accident – Build an injury investigation process to analyze what happened and how it could be prevented in the future. Think about where the panic set in and procedures were not followed and strive to eliminate that stress during future accidents. 

ArboRisk’s mission is to get you and your employees home safe every day. That said, in the event of an accident, we also want to make sure that you’re in the best position possible to mitigate and minimize the damage to your employee and your company. Part of our Risk Management services includes an Accident Preparedness program that will help you to lay out the procedures in the event of an accident. For more information, please contact an ArboRisk team member today.