Worker’s Compensation is a complex issue for most businesses to manage, and if you aren’t attentive to it, your construction company’s ability to do business profitably could be impacted.
New York State assigns an experience modification factor (MOD) rating representing an employer’s relative expected claims. This MOD rating could impact your insurance premiums for up to three years.
Marshall + Sterling works with our construction clients to examine and understand workplace incidents and trends resulting in claims so you can put in place programs that will prevent incidents and better manage your MOD and resulting premiums.
How can a MOD impact my business?
Let’s dive deeper into how a MOD can impact your business.
MOD ratings are generally determined on an annual basis and are usually effective for a period of twelve months. The Rating Board automatically computes experience ratings for eligible New York employers and provides this information to carriers to calculate policy premiums.
New York changed its Workers Compensation MOD formula in 2022, placing more emphasis on claim frequency and less on claim severity, reducing the impact of random large losses. The intention has been to align insurance premiums closer to an employer’s actual claims history.
The experience period used to determine an employer’s experience rating generally consists of three completed years of experience ending one year prior to the effective date of the modification. For example, for a rating effective July 1, 2024, New York State would examine the experience from policies effective July 1, 2020, July 1, 2021 and July 1, 2022.
Public and private firms employing workers in New York State with a MOD exceeding 1.20 and with more than $800,000 in annual payroll also are subject to New York State’s Industrial Code Rule 59 (ICR 59).
What happens if my MOD gets too high?
If your MOD is set above 1.20, you will receive a notification from the New York Compensation Insurance Rating Board (NYCIRB) requiring a safety evaluation with a certified consultant. This evaluation will have specific deadlines and requirements. Employers that do not follow the law will receive a 5% surcharge on the manual portion of their workers’ compensation premium. That surcharge increases an extra 5% for each year they do not comply. (ICR59 does not apply to self-insured employers.)
You can access both the statute and the regulations from the New York State DOL web site at www.labor.ny.gov.
Marshall + Sterling wants you to stay out in front of any trends with your MOD, so that you have the best potential to control your insurance premiums. If you would like us to set up a MOD review, discuss a safety evaluation, or develop customized training programs for your firm, contact me, at kpagano@marshallsterling.com.
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