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9 Key Concepts


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9 Key Concepts

  1. 1. Specific Software Solutions / SIGMA Introduction to Experience Rating 9 Key Concepts ModMaster Software
  2. 2. What is ModMaster ? <ul><li>Software to compute, analyze, and present the workers compensation modification factor </li></ul><ul><li>More than software…it is a tool that helps you communicate the KEY CONCEPTS of experience rating </li></ul>
  3. 3. Our Clients say ModMaster is… <ul><li>Incredibly easy to use </li></ul><ul><li>Backed by great tech support </li></ul><ul><li>Supported with timely database updates </li></ul><ul><li>A true competitive advantage </li></ul><ul><li>BOTTOM LINE >> Communicating the KEY CONCEPTS is DOABLE ! </li></ul>
  4. 4. Experience Rating: Fair but Confusing
  5. 5. Fair & Balanced <ul><li>Comparison of actual losses vs. expected losses </li></ul><ul><li>NOT >> Losses to premium </li></ul><ul><li>Designed to be “Fair” (W and B) </li></ul><ul><li>Looks at a three year period (important!) </li></ul><ul><li>Long term solution! Know the KEY CONCEPTS and lower losses, lower mod, lower overall costs and KEEP CLIENTS </li></ul>
  6. 6. Confusing <ul><li>Unanticipated changes </li></ul><ul><li>Clients don’t understand </li></ul><ul><li>Agents often caught off guard </li></ul><ul><li>Math is “scary” </li></ul><ul><li>Seems like a black box </li></ul><ul><li>Key concepts are not communicated </li></ul>
  7. 7. The Confusion also creates an Opportunity
  8. 8. What you can do for your clients.. <ul><li>Better explanation of mod </li></ul><ul><li>Communicate the KEY CONCEPTS of experience rating </li></ul><ul><li>Anticipate changes in the mod </li></ul>
  9. 9. Using ModMaster is Incredibly Easy
  10. 10. Data you will need <ul><li>Losses for experience rating period </li></ul><ul><li>Payroll for experience rating period </li></ul><ul><li>Experience rating period is usually three years excluding most recently completed policy period. </li></ul><ul><li>For 6/1/2006, this is 6/1/02-5/31/03, 6/1/03-5/31/04, 6/1/04-5/31/05 </li></ul>
  11. 11. Where do you get the data? <ul><li>Current mod sheet </li></ul><ul><li>Company records </li></ul><ul><li>Insurance carrier </li></ul><ul><li>NOTE>> Even if you can’t get data before mod is promulgated – the mod analysis is extremely valuable ! </li></ul>
  12. 12. ModMaster Analyses <ul><li>ModMaster users find a lot of different ways to use ModMaster </li></ul><ul><li>Three main uses: </li></ul><ul><ul><li>Project the mod and prevent surprises </li></ul></ul><ul><ul><li>See impact of changes in data </li></ul></ul><ul><ul><li>Analyze & provide insight ( THE KEY CONCEPTS ) </li></ul></ul>
  13. 13. ModMaster Main Menu
  14. 14. ModMaster Setup Data Step 1: Enter Setup Data
  15. 15. ModMaster Payroll Data Step 2: Enter Payroll Data
  16. 16. ModMaster Small Losses Step 3: Enter Small Loss Data: Losses Under $5,000 grouped
  17. 17. ModMaster Large Losses Step 4: Enter itemized / large losses
  18. 18. ModMaster Mod Summary Step 5: Perform the Calculation
  19. 19. ModMaster Reports & Graphs <ul><li>29 reports & graphs </li></ul><ul><li>Formatted & ready to print </li></ul><ul><li>Reports tell a story </li></ul><ul><li>Reports communicate the KEY CONCEPTS </li></ul>
  20. 20. ModMaster Reports & Graphs
  21. 21. Bureau report <ul><li>“ Bureau Type” format </li></ul><ul><li>Familiar format for communicating the mod </li></ul><ul><li>Sample report </li></ul>
  22. 24. Mod Impact on Premium Analysis <ul><li>Communicate four key numbers </li></ul><ul><ul><li>Average Mod (what competition is paying) </li></ul></ul><ul><ul><li>Current Mod (what the client is paying) </li></ul></ul><ul><ul><li>Minimum Mod (how low the mod could go) </li></ul></ul><ul><ul><li>Controllable Mod (what’s on the table) </li></ul></ul><ul><li>Key Concepts #1 and #2 </li></ul><ul><li>Sample report </li></ul>
  23. 25. The “average” competitor pays YOU pay What you are paying could be this LOW! This is what you can control AND potentially SAVE through loss control
  24. 27. Loss Analysis by Policy Period <ul><li>Compare actual vs. expected losses by policy period </li></ul><ul><li>Identify trends and anticipate changes </li></ul><ul><li>Communicate the basic theory of experience rating: actual vs. expected </li></ul><ul><li>Key Concept #3 </li></ul><ul><li>Sample report </li></ul>
  25. 28. The “good” year will leave! The “bad” year will remain!
  26. 29. Ratio Analysis <ul><li>Compare actual to expected </li></ul><ul><li>Primary losses (measure of frequency) </li></ul><ul><li>Excess losses (measure of severity) </li></ul><ul><li>Key Concept #4 and #5 </li></ul><ul><li>Sample report </li></ul>
  27. 32. Specific Loss Sensitivity <ul><li>Show the “true” cost of a loss due to increased premiums </li></ul><ul><li>One of the most eye-opening reports </li></ul><ul><li>Key Concept #6 </li></ul><ul><li>Sample report </li></ul>
  28. 33. Both claims had $4,500 in medical, but the TN claim also had $750 in indemnity The $750 in indemnity payments cost $6,315 in increased premium. Too bad they couldn’t get this employee back to work! BACK TO WORK MATTERS
  29. 34. Aggregate Loss Sensitivity <ul><li>A “What if” report showing mod and premium at different loss levels </li></ul><ul><li>Helps planning and goal setting </li></ul><ul><li>Key Concept #7 and #8 </li></ul><ul><li>Sample report </li></ul>
  31. 36. Three Year Cost of Losses <ul><li>Two separate reports </li></ul><ul><ul><li>Three Year Premium Cost of Various Losses </li></ul></ul><ul><ul><ul><li>Looks at a broad range of losses </li></ul></ul></ul><ul><ul><ul><li>Computes three year cost and premium to loss ratio </li></ul></ul></ul><ul><ul><li>Three Year Premium Cost of Small Losses </li></ul></ul><ul><ul><ul><li>Looks at small losses ($50 to $500) </li></ul></ul></ul><ul><ul><ul><li>Computes three year cost (ERA and non-ERA) </li></ul></ul></ul><ul><li>Reinforces Key Concept #6 and #8 </li></ul><ul><li>Sample report: Various Losses </li></ul><ul><li>Sample report: Small Losses </li></ul>
  32. 37. WOW! Employers pay for their losses!
  33. 38. Keeping claims “medical only” saves a BUNDLE!
  34. 39. Loss Identifier Report <ul><li>Sorts impact on mod by Loss Identifier field </li></ul><ul><li>We used Employee Name for example </li></ul><ul><li>Reinforces Key Concept #9 </li></ul><ul><li>Sample report: Loss Identifier Report </li></ul>
  35. 40. Modification Summary <ul><li>Summary of key values in calculation </li></ul><ul><li>Good report for “analytical” clients </li></ul><ul><ul><li>Shows mod formula </li></ul></ul><ul><ul><li>Shows specific numbers for client’s mod </li></ul></ul><ul><ul><li>Shows calculation of the minimum mod </li></ul></ul><ul><li>Sample report </li></ul>
  36. 43. Mod Snapshot <ul><li>One page that says it all </li></ul><ul><ul><li>Key values </li></ul></ul><ul><ul><li>Impact on premium analysis (mod breakdown) </li></ul></ul><ul><ul><li>Specific loss sensitivity </li></ul></ul><ul><ul><li>Losses by policy period </li></ul></ul><ul><ul><li>The mod formula </li></ul></ul><ul><li>Sample report </li></ul>
  37. 44. Show the key numbers for the analytical types Highlight the Minimum and Controllable Mod! Discuss each loss impacts the mod and premium paid Introduce “actual” vs. “expected” and the three year period. Show the formula and how the mod is computed
  38. 45. Pause for some observations <ul><li>Employer pays for a large part of workers comp claims through changes in the mod </li></ul><ul><li>ModMaster helps make the point </li></ul><ul><li>Study: Most lost time claims can be avoided </li></ul><ul><li>ModMaster showed us: lost time turns a med only into a very expensive claim </li></ul><ul><li>Communicate the KEY CONCEPTS </li></ul><ul><li>Move clients away from “low bid” mentality to “ownership” and long term solutions – resulting in increased client retention. </li></ul>
  39. 46. Help is available <ul><li>Priority support form on the web </li></ul><ul><li>FREE online training videos </li></ul><ul><ul><li>CLICK ON “SUPPORT” </li></ul></ul><ul><li>Robust FAQ database </li></ul><ul><li>Articles & Newsletters </li></ul><ul><li>Toll free technical support </li></ul><ul><ul><li>800-929-4052 x 201 </li></ul></ul><ul><li>E-mail support </li></ul><ul><ul><li>[email_address] </li></ul></ul>
  40. 47. THANK YOU!! Call us at 800-929-4052 A Previous version of this presentation is on the web at
  41. 48. Experience Rating KEY CONCEPTS <ul><li>#1 Know the employers minimum mod </li></ul><ul><li>#2 Determine the part of the mod the employer can control </li></ul><ul><li>#3 Compare employer’s total losses to industry average and know the trend </li></ul>
  42. 49. Experience Rating KEY CONCEPTS <ul><li>#4 Determine if the employer is having too many losses (frequency) </li></ul><ul><li>#5 Determine if the employer’s losses are too large (severity) </li></ul><ul><li>#6 Determine the impact each loss has on the mod and the ultimate premium paid </li></ul>
  43. 50. Experience Rating KEY CONCEPTS <ul><li>#7 Know how the mod and premium change with aggregate changes in losses </li></ul><ul><li>#8 Understand the significant impact on the mod and premium when small losses are kept as medical only. (NOT AK, CA, CO, DE, GA, IA, LA, MA, MO, NJ, NM, NY, OR, PA, TX) </li></ul><ul><li>#9 Know the cost of injuries, in terms of increased premium that will be paid, by employee name. </li></ul>