ModMaster is software that helps communicate key concepts of experience rating to clients by calculating workers' compensation modification factors and presenting reports. It makes experience rating easier to understand and anticipate changes. The document outlines nine key concepts of experience rating and how ModMaster can help explain each concept through various reports and analyses. This helps clients better understand how their losses and claims impact premiums.

1. Specific Software Solutions / SIGMA Introduction to Experience Rating 9 Key Concepts ModMaster Software

2. What is ModMaster ? Software to compute, analyze, and present the workers compensation modification factor More than software…it is a tool that helps you communicate the KEY CONCEPTS of experience rating

3. Our Clients say ModMaster is… Incredibly easy to use Backed by great tech support Supported with timely database updates A true competitive advantage BOTTOM LINE >> Communicating the KEY CONCEPTS is DOABLE !

4. Experience Rating: Fair but Confusing

5. Fair & Balanced Comparison of actual losses vs. expected losses NOT >> Losses to premium Designed to be “Fair” (W and B) Looks at a three year period (important!) Long term solution! Know the KEY CONCEPTS and lower losses, lower mod, lower overall costs and KEEP CLIENTS

6. Confusing Unanticipated changes Clients don’t understand Agents often caught off guard Math is “scary” Seems like a black box Key concepts are not communicated

7. The Confusion also creates an Opportunity

8. What you can do for your clients.. Better explanation of mod Communicate the KEY CONCEPTS of experience rating Anticipate changes in the mod

9. Using ModMaster is Incredibly Easy

10. Data you will need Losses for experience rating period Payroll for experience rating period Experience rating period is usually three years excluding most recently completed policy period. For 6/1/2006, this is 6/1/02-5/31/03, 6/1/03-5/31/04, 6/1/04-5/31/05

11. Where do you get the data? Current mod sheet Company records Insurance carrier NOTE>> Even if you can’t get data before mod is promulgated – the mod analysis is extremely valuable !

12. ModMaster Analyses ModMaster users find a lot of different ways to use ModMaster Three main uses: Project the mod and prevent surprises See impact of changes in data Analyze & provide insight ( THE KEY CONCEPTS )

13. ModMaster Main Menu

14. ModMaster Setup Data Step 1: Enter Setup Data

15. ModMaster Payroll Data Step 2: Enter Payroll Data

16. ModMaster Small Losses Step 3: Enter Small Loss Data: Losses Under $5,000 grouped

17. ModMaster Large Losses Step 4: Enter itemized / large losses

18. ModMaster Mod Summary Step 5: Perform the Calculation

19. ModMaster Reports & Graphs 29 reports & graphs Formatted & ready to print Reports tell a story Reports communicate the KEY CONCEPTS

20. ModMaster Reports & Graphs

21. Bureau report “ Bureau Type” format Familiar format for communicating the mod Sample report

24. Mod Impact on Premium Analysis Communicate four key numbers Average Mod (what competition is paying) Current Mod (what the client is paying) Minimum Mod (how low the mod could go) Controllable Mod (what’s on the table) Key Concepts #1 and #2 Sample report

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

27. Loss Analysis by Policy Period Compare actual vs. expected losses by policy period Identify trends and anticipate changes Communicate the basic theory of experience rating: actual vs. expected Key Concept #3 Sample report

28. The “good” year will leave! The “bad” year will remain!

29. Ratio Analysis Compare actual to expected Primary losses (measure of frequency) Excess losses (measure of severity) Key Concept #4 and #5 Sample report

32. Specific Loss Sensitivity Show the “true” cost of a loss due to increased premiums One of the most eye-opening reports Key Concept #6 Sample report

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

34. Aggregate Loss Sensitivity A “What if” report showing mod and premium at different loss levels Helps planning and goal setting Key Concept #7 and #8 Sample report

35. CUT LOSSES 50% MOD DROPS 24 POINTS PREMIUM DROPS $11,874

36. Three Year Cost of Losses Two separate reports Three Year Premium Cost of Various Losses Looks at a broad range of losses Computes three year cost and premium to loss ratio Three Year Premium Cost of Small Losses Looks at small losses ($50 to $500) Computes three year cost (ERA and non-ERA) Reinforces Key Concept #6 and #8 Sample report: Various Losses Sample report: Small Losses

37. WOW! Employers pay for their losses!

38. Keeping claims “medical only” saves a BUNDLE!

39. Loss Identifier Report Sorts impact on mod by Loss Identifier field We used Employee Name for example Reinforces Key Concept #9 Sample report: Loss Identifier Report

40. Modification Summary Summary of key values in calculation Good report for “analytical” clients Shows mod formula Shows specific numbers for client’s mod Shows calculation of the minimum mod Sample report

43. Mod Snapshot One page that says it all Key values Impact on premium analysis (mod breakdown) Specific loss sensitivity Losses by policy period The mod formula Sample report

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

45. Pause for some observations Employer pays for a large part of workers comp claims through changes in the mod ModMaster helps make the point Study: Most lost time claims can be avoided ModMaster showed us: lost time turns a med only into a very expensive claim Communicate the KEY CONCEPTS Move clients away from “low bid” mentality to “ownership” and long term solutions – resulting in increased client retention.

46. Help is available Priority support form on the web www.specificsoftware.com FREE online training videos CLICK ON “SUPPORT” Robust FAQ database Articles & Newsletters Toll free technical support 800-929-4052 x 201 E-mail support [email_address]

47. THANK YOU!! Call us at 800-929-4052 A Previous version of this presentation is on the web at www.specificsoftware.com/keyconcepts

48. Experience Rating KEY CONCEPTS #1 Know the employers minimum mod #2 Determine the part of the mod the employer can control #3 Compare employer’s total losses to industry average and know the trend

49. Experience Rating KEY CONCEPTS #4 Determine if the employer is having too many losses (frequency) #5 Determine if the employer’s losses are too large (severity) #6 Determine the impact each loss has on the mod and the ultimate premium paid

50. Experience Rating KEY CONCEPTS #7 Know how the mod and premium change with aggregate changes in losses #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) #9 Know the cost of injuries, in terms of increased premium that will be paid, by employee name.