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How a Manufacturer Reduced its Skyrocketing Experience Modifier and Cut Total Workers’ Compensation Costs by 39%

July 21, 2016

A company that manufactures hotel furnishings in California was on the brink of shutting down as a result of out-of-control workers’ compensation expenses. Here’s how the company was able to rein in costs and implement systematic loss control measures with a specialized high-risk workers’ comp program powered by Pride Risk Solutions.

Pride Risk Vice President Greg Craddock discusses how a California hotel furnishings manufacturer was able to stay in business due to obtaining coverage through the high-hazard workers’ comp program.

High Mod, Spiraling Costs Make Coverage Unaffordable

The manufacturer had previously been covered by the California State Compensation Insurance Fund, but inadequate attention to loss control and risk management had driven up the company’s experience modifier. As the mod increased—exceeding 6.00—the cost of coverage became so high that even a workers’ comp policy with the State Fund was no longer affordable.

The company’s insurance agent seemed to have exhausted every available coverage option. Then Pride Risk offered an alternative.

High-Hazard Workers’ Comp Program Keeps Company in Business

Pride Risk was able to connect the hotel furnishings manufacturer with a specialized workers’ comp program for high-risk insureds. With this program, the company was able to reduce its workers’ comp expenses to:

  • A deductible of $25,000
  • A deposit of less than $9,000 to bind coverage
  • Total program costs of less than $360,000

By significantly reducing the upfront costs required to secure workers’ comp coverage, the high-hazard program offered a way for the business to keep its doors open.

Increased Focus on Loss Control Results in Lower Mod and Costs

As part of the program, the company began to implement systematic loss control and risk management measures. These efforts paid off when the manufacturer was able to reduce its experience modifier from 6.38 to less than 4.00 and reduce its total program cost by 39%, producing approximately $140,000 in savings.

By continuing this trend, the company will be able to ensure affordable workers’ compensation coverage and safeguard its long-term interests.

What Kind of Company Is a Fit for the High-Risk Workers’ Comp Program?

The high-hazard workers’ comp solution is a potentially viable option for any organization that is having trouble finding affordable coverage, and there are multiple factors that affect the cost of a workers’ comp program. The following indicators can help agents and brokers identify clients that would be able to benefit from the Pride Risk solution.

  • Experience Modifiers over 1.00
  • Cancelled / Non-Renewed Coverage / Gap in Coverage
  • Large Losses / Poor Claims Experience
  • Few or no options other than the State Insurance Fund

These attributes often make it difficult for companies to afford coverage offered by the traditional insurance markets.

How Insurance Agents Can Help High-Risk Clients Find a Solution

Pride Risk helps agents and brokers by providing access to tailored workers’ compensation solutions that are designed to meet individual clients’ risk management needs and financial objectives.

The high-hazard workers’ comp program combines carefully designed criteria and an unparalleled emphasis on loss control to minimize costs—enabling clients to achieve immediate savings with this solution. Over the long term, the program’s focus on preventing losses and managing claims effectively help to ensure stable or decreasing costs.

Learn more about how you can address the market for high-risk workers’ compensation solutions.