What Most Workers' Comp Buyers Get Wrong

When it comes to buying workers’ comp insurance, most business owners focus on one thing: price.

And while getting a good deal makes sense, the cheapest policy today can cost you big tomorrow.

That’s because workers’ comp premiums aren’t just about how many claims you’ve had. They’re about how those claims are handled. If your insurer botches claims management, your Experience Modifier (Ex-Mod) will skyrocket—taking your premiums with it.

Let’s break it down.

How Your Ex-Mod Is Calculated (And Why It follows you)

Your Experience Modifier (Ex-Mod) is the way your state's independent rating bureau or the National Council on Compensations Insurance (NCCI) indicates your company's risk by  comparing your claims history to others in your industry.

Your current Ex Mod is based on your past three years' workers' compensation claims and your premium. 

An Ex-Mod of 1.0 means you’re average. But if yours is 1.2, you’re paying 20% more in premiums than a business with fewer or better-managed claims.

And because every workers' comp carrier is legally required to use your Ex-Mod when setting your rates, a bad Ex-Mod follows you no matter where you go.

Bad Service = Higher Premiums

Many business owners assume all workers' comp policies are the same. After all, state laws mandate that every carrier provides the same basic coverage, right?

Yes—but here's what they miss.

What really affects your costs isn’t just the policy itself—it’s the quality of claims management and injury prevention services your carrier provides.

If your insurer has slow claims processing, fails to guide injured employees through recovery, or isn’t proactive in preventing claims in the first place, here’s what happens:

• Higher claim reserves: Insurance carriers set aside more money for expected claim costs.
• Longer claim durations: Employees stay off work longer than necessary.
• More lawsuits: Injured workers seek legal representation due to delays or poor communication.

All of this increases your Ex-Mod—and your premiums. This is why choosing a carrier based on price alone can backfire. 

If your workers' comp provider isn’t actively helping you reduce claims and control costs, you’re paying for it—whether you realize it or not.

What you can (and can't) control about your Ex-Mod

Some aspects of your Ex-Mod are out of your hands, like:

• The baseline loss rates for your industry
• The state-mandated formula used to calculate Ex-Mod

But you have more control over aspects like:

• Claims Prevention: Stop injuries before they happen with ergonomic programs, training, and safety tech.
• Claims Handling: Report claims fast and manage them efficiently to avoid unnecessary costs.
• Return-to-Work Programs: Get injured employees back to work quicker with modified duty programs.
• Choosing the Right Provider: Work with a carrier that actively helps you reduce risk—not just write policies.

How to Take Control of Your Workers' Comp Costs

If your workers' comp provider only talks to you at renewal time, you’re missing out on opportunities to lower your Ex-Mod and reduce long-term costs.

The best time to start making changes is right now—before another claim impacts your next three years of premiums.

At Kinetic, we help businesses like yours take control of workers’ comp costs through:

• Tech-driven safety programs that reduce injury risks
• Proactive claims management to lower reserves and prevent unnecessary legal action
• Real-time insights to help you improve workplace safety and lower your Ex-Mod

And one of the easiest ways to protect your business is to report claims fast. Delayed reporting leads to higher costs and longer claims. Find out why fast claim reporting matters here.

Bottom Line? Smart Workers’ Comp Buyers Look Beyond Price

Choosing the lowest-priced policy might seem like a win today, but if it comes with poor claims management, you’ll be paying a lot more in the years to come.

Instead, make sure your workers' comp partner is actively helping you prevent injuries, manage claims effectively, and reduce long-term costs.

Want to see how Kinetic can help you lower your Ex-Mod? Let’s talk.