Business Owners, if you let your Workers’ Compensation Unit Statistical Filing Date pass by, you could be paying more in insurance premium. Unfortunately, too often business owners are unaware of what a Unit Statistical Date is, when it occurs, and how it affects their Workers’ Compensation Experience Modification Factor (MOD).
A Unit Statistical Date (or Unit Stat or Valuation Date) occurs 6 months after a Workers’ compensation policy is put in force. It is also the date the insurance company sends loss and claims information to the rating bureau for the promulgation of the insured’s Experience Modification Factor (MOD). The MOD is an important factor in determining your Worker’s compensation premium.
The MOD is calculated by using claims costs for a prior three-year period (excluding the current policy period). An important element in this calculation are claims reserves. Reserves are the monies that are estimated to pay out claims that have not yet been closed. So, if you have an employee that has been injured and treatment or therapy is on-going or if there are any legal dealings, the insurance company adjusters will put an estimate on what they think the total cost will be to settle the claim. These estimated costs are placed on the loss as a reserve and if the reserves are too high or have not been removed after the claim is closed, business owners can and will end up paying more for their insurance. The MOD does more to control cost than any other factor in the entire Workers’ compensation process.
So what can be done to help reduce your MOD? Your agent or broker that you have hired to represent you and negotiate your insurance package should, at least 90 days prior to your Unit Stat Date, review your Workers’ compensation loss runs and discuss open claims with you and your insurance adjuster. This process often takes some time so it is important that your broker has started early enough so that adjustments can be made before any information is sent to the rating bureau. Only under very limited circumstances can changes be made to your MOD after the Unit Stat Date has occurred. Make sure you check with your broker to ensure that they are proactively verifying information prior to your Unit Stat Date. If they aren’t, it may be time to hire a new broker that is dedicated to providing you the best protection at the best possible price.