Worker’s Comp MOD Case Study
Claims accumulate over time, and without proper management of both paid and reserve dollars, your MOD rating can suffer—resulting in significantly higher premiums year after year.
Here’s a real-world example of how high Workers' Comp premiums contributed to the voluntary closure of my DSP operation, and how actively managing our claims could have saved us hundreds of thousands annually in WC premiums and kept us in business:
TOP 5 CLAIMS 2022-2023
$96,354 — DA Walking down a customer's driveway, slipped on ice & injured left knee
$71,953 — DA Attacked by dogs, sustained injuries to head, right arm & left wrist
$67,274 — DAs truck slid down a hill (severe ice storm) and hit a customer's fence and broke wrist
$56,112 — DA Slipped while getting into the delivery van and injured left knee
$31,692 — DA was hit by another vehicle while delivering and then experienced headaches
Total for Claims = $323,389
FACTS:
ZENA’s Workers' Comp MOD = 2.05
Annual premium = $410,650
HINDSIGHT SCENARIO:
If ZENA would have managed claims better, we could have reduced our $323,389 incurred claims by 30%, and we could have lowered our MOD from 2.05 to 1.60—resulting in:
Annual Savings: $90,144*
Adjusted Annual Premium: $320,506
3-year Savings: $90,144 x 3 yrs = $270,432 (assuming we kept a consistent payroll and MOD rating)
OBSERVATION:
Managing claims proactively, avoiding just one large claim (anything above $29,000) or properly managing that claim could have reduced our MOD by 19 points, leading to even greater premium savings.
IMPACT:
With ongoing loss mitigation and claims management, ZENA’s MOD and Workers' Comp premiums would have continued to decrease in future years—helping us stay in business!
This example highlights the importance of proactive claims management in maintaining a sustainable and profitable DSP operation.
*Calculation Details:
A reduction of just $52,957 in incurred claims expenses across all claims in a given year would lead to a premium reduction of $90,144 annually, with compounding savings potentially increasing each year thereafter.
For reference, 30% of $323,389 (total claims for 2022-2023) equals $270,432.