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Return to Work Programs. Effect On The Bottom Line. Companion Property & Casualty. Workers’ Compensation Costs. How are premiums calculated? How do losses impact premium? How does a Return to Work Program help control costs?. Workers’ Compensation Premiums.

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Return to Work Programs

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Return to work programs

Return to Work Programs

Effect On The Bottom Line

Companion Property & Casualty

Workers compensation costs

Workers’ Compensation Costs

  • How are premiums calculated?

  • How do losses impact premium?

  • How does a Return to Work Program help control costs?

Workers compensation premiums

Workers’ Compensation Premiums

  • Several factors determine WC premium

    • Class Code: Different job classes involve a different degree of risk. They are weighed using a rating when calculating premium (example: administration vs. construction).

    • Payroll

    • Experience Modification Factor

    • Other Considerations

Case example abc manufacturing

Case Example: ABC Manufacturing

Manual premium

Manual Premium

  • Your manual premium is the premium before any other factors are applied.

  • The experience modification factor is applied to the manual premium.

What is the experience modifier

What is the Experience Modifier?

  • It is thenumber used by the insurance industry to compare a company’s injury experience with similar companies.

  • It either will decrease or increase your premium depending on injury history.

  • Frequency and severity of claims impact the experience modifier.

Experience modifier

Experience Modifier

Debit Mod.

  • All businesses start with a 1.0 experience mod.

  • A High Mod (e.g. 1.5) can increase WC costs by 50%.

  • What is your company’s experience modifier (mod rate)?




Credit Mod.

Use of the experience mod

Use of the Experience Mod.

  • Manual Premium x Exp. Mod.= Premium*

  • $26,908 x 1.5= $40,362

  • $26,908 x .7 = $18,835

  • Difference between good mod vs. poor mod= $21,527

*Additional credits or debits may apply.

Abc manufacturing a look at the effective use of rtw

ABC Manufacturing: A look at the effective use of RTW

  • What if ABC used RTW each year?

  • How would that effect their premium?

  • How would it effect their experience modifier?

Rtw impact abc manufacturer

RTW Impact : ABC Manufacturer

Return to work and experience modifier

Return to Work and Experience Modifier

  • Your experience modifier can change each year.

  • A bad year will impact the modifier for THREE years.

  • By returning an employee back to work, you not only CONTROL negative impact to your mod. for the current year, but it’s impact for the next three years.

Translating rtw savings to sales

Translating RTW Savings to Sales

  • Assuming a 4% profit margin- How many dollars in sales did RTW save?

  • $8,190 / .04 = $204,750 in sales.

Rtw impact to experience mod

RTW Impact to Experience Mod.

  • ABC Manufacturing saved $8,190 in direct premium costs by providing transitional work options on 4 claims.

  • Consistently applied, the use of RTW could cumulatively have greater impact on experience mod.

Total injury costs direct vs indirect costs

Total Injury Costs: Direct vs. Indirect Costs

  • Direct claims costs are just the tip of the iceberg. Cost of injuries are much more than the cost of a claim.

  • Indirect Costs: Administrative time, retraining, loss of production, damaged equipment, etc. can cost up to 4 times the direct cost.

Effect of return to work

Effect of Return to Work…

  • Decreased cost of the claim and the impact of the “experience mod.”

  • Workers are utilized and productive.

  • Claim is more effectively managed.

  • Result = better use of employee, lower costs, effective management of claim.

How to control your experience mod

How to Control Your Experience Mod?

  • Establish a good safety program. Fewer accidents = fewer costs.

  • Report claims promptly and use a quality medical provider. Good treatment = controlled costs.

  • Implement a proactive Return to Work Program.

Returning injured workers as soon as medically safe

Returning injured workers as soon as medically safe…

  • Reduces cost of lost wages

  • Reduces severity.

  • Discourages fraud and malingering

  • Improves communication and reduces litigation.

Other premium factors

Other Premium Factors

  • Insurance markets favor those with effective safety programs.

  • Insurance markets favor those who proactively use RTW programs to reduce costs.

  • Good insurance risks can gain pricing leverage by demonstrating they control costs.



  • Worker’s Compensation costs can be controlled with:

  • Accident Prevention: The best way to control WC costs

  • Return to Work Programs: Post accident, this is a key element to controlling costs.

  • Additional information can be found on

  • Thank You!

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