Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.
Rancho Mesa’s Safety KPI Dashboard allows businesses the ability to clearly visualize their path to an Experience MOD (XMOD) below 1.00 through goal setting.
In order to set your business goal, you will need to use three available metrics from your custom dashboard.
Lowest Possible XMOD – This is the best case scenario if you had zero claims for the three-year XMOD period.
Claim Cost Per 1 XMOD Point – This is the amount of incurred claim cost that impacts your XMOD by 1 point.
Unit Stat Date – This is the moment when your information is sent to the rating bureau for next year’s XMOD to be calculated.
Using these three metrics together, you can effectively set your goal and manage your XMOD accordingly.
The XMOD is calculated using a running three-year window of the most recently completed workers’ compensation policies. Each policy period will contribute a set amount of weight on the XMOD calculation based on payroll and claims.
Take your lowest possible XMOD from the KPI dashboard and subtract that number from .99.
You will be left with the amount of XMOD points your company can absorb while still keeping your XMOD below 1.00.
Divide that number by three and you can evenly distribute the amount of XMOD points you can have each year to keep your XMOD below 1.00.
Take the annual XMOD points and multiple by your Claim Cost Per 1 XMOD Point.** This will give you the maximum claim cost available per policy period.
Example:
Lowest Possible XMOD: 47
Claim Cost Per 1 XMOD Point: $3,100
Unit Stat: September 30th
(.99) – (.47) = .52 (Number of XMOD points available to absorb and keep XMOD below 1.00)
(.52) / (3) = 17.3 (Max XMOD points per year)
(17.3) * (3,100) = $53,630 (Max claim cost available per policy period) **
**Must consider your primary threshold, which is also a number available on the KPI Dashboard.
Knowing these numbers, along with when your unit stat date comes up, allows you to strategically plan.
If all of this seems complicated or you just want to see what your company’s dashboard would look like, request a personalized KPI Dashboard and we can discuss how you can develop a path to an XMOD below 1.00.