NCCI MOD
How does the NCCI Mod impact Staffing Companies?
As a staffing company, your employees are your most valuable asset. Ensuring their safety and well-being is crucial not just from a human standpoint, but also from a financial perspective. Workers' compensation costs can be a significant expense for staffing companies, and understanding the NCCI Mod worksheet is critical to managing those costs.
What is the NCCI Mod Worksheet?
The National Council on Compensation Insurance (NCCI) is a non-profit organization that collects data, analyzes industry trends, and provides workers' compensation insurance rating and filing services in over 38 states. The NCCI Mod worksheet is a calculation used by insurance companies to determine the experience modification factor (also known as "mod" or "EMR") for a particular company.
The mod is a measure of how a company's actual losses compare to expected losses for its industry. A mod of 1.0 is considered average, while a mod above 1.0 indicates higher than average losses and a mod below 1.0 indicates lower than average losses.
How Does the NCCI Mod Worksheet Affect Your Workers' Compensation Costs?
The mod directly impacts a company's workers' compensation costs. Insurance companies use the mod to adjust a company's workers' compensation premium, with a higher mod resulting in a higher premium and a lower mod resulting in a lower premium. Essentially, the mod reflects the insurance company's expectation of future losses based on past performance. If a company has had a history of high losses, the mod will be higher, and the premium will be more expensive.
For staffing companies, the mod can be particularly challenging to manage since they often have a high turnover rate and a fluctuating workforce. The NCCI Mod worksheet takes into account a company's payroll and loss history, so changes in the number of employees or the severity of claims can impact the mod and, subsequently, the premium.
How is the NCCI Mod Worksheet Calculated?
The NCCI Mod worksheet takes into account three years of a company's payroll and loss history, with more recent years having a greater impact on the mod calculation. The calculation involves comparing the actual losses a company has incurred with the expected losses for the industry and adjusting for the size of the company.
The formula for calculating the mod is as follows:
(Actual losses / Expected losses) x Adjustment factor = Mod
The adjustment factor takes into account the size of the company and is intended to prevent small companies with only one or two claims from having an unfairly high mod. The adjustment factor is typically around 0.7 for small companies and can be as high as 1.5 for larger companies.
In Conclusion
The NCCI Mod worksheet is an essential tool for managing workers' compensation costs for staffing companies. Understanding how the mod is calculated and how it impacts your premium can help you identify areas where you can improve safety and reduce losses.