Taking the creative route to save a contract
It’s a well-known fact that a company’s Experience Mod has an effect on its bottom line because of the additional Workers’ Comp costs that result from it. However, sometimes a high Experience Mod can also directly affect how you do business.
A HVAC parts and service company was in danger of losing its largest account. In the interest of promoting on-site job safety, the customer, one of the country’s largest paper manufacturers, had established a policy that it would not do business with any vendor whose Experience Mod was greater than 1.0.
Since the HVAC parts and service company could ill afford to lose their largest customer, they turned to a Certified WorkComp Advisor (CWCA) for assistance. In evaluating the situation, the CWCA found that the paper company only did business with the HVAC Company’s Service Department. Therefore, she broke apart the Experience Mod by departments such as electrical, residential, plumbing and service and was able to show how each department affected the Mod and what the Mod would be for each department individually.
This revealed that much of the basis for the Mod was from the company’s Residential Plumbing division, not the industrial service division that did business with the paper company. In fact, the Service Department did not have a single claim that contributed to the Mod, which means as a stand-alone company that department would have an Experience Mod well below 1.0.
The department’s sub-1.0 Experience Mod satisfied the paper manufacturer and enabled the HVAC Company to keep the contract. It also inspired the HVAC Company to bring in the CWCA to teach all of his employees about their roles in controlling Workers’ Compensation costs.