Hide Notes 

Slide 1: Specific Software Solutions / SIGMA Introduction to Experience Rating 9 Key Concepts ModMaster Software www.specificsoftware.com 1
Slide 2: What is ModMaster ? Software to compute, analyze, and present the workers compensation modification factor More than software…it is a tool that helps you communicate the KEY CONCEPTS of experience rating www.specificsoftware.com 2
Slide 3: Our Clients say ModMaster is… Incredibly easy to use Backed by great tech support Supported with timely database updates A true competitive advantage BOTTOM LINE >> Communicating the KEY CONCEPTS is DOABLE! www.specificsoftware.com 3
Slide 4: Experience Rating: Fair but Confusing www.specificsoftware.com 4
Slide 5: Fair & Balanced Comparison of actual losses vs. expected losses NOT >> Losses to premium Designed to be “Fair” (W and B) Looks at a three year period (important!) Long term solution! Know the KEY CONCEPTS and lower losses, lower mod, lower overall costs and KEEP CLIENTS www.specificsoftware.com 5
Slide 6: Confusing Unanticipated changes Clients don’t understand Agents often caught off guard Math is “scary” Seems like a black box Key concepts are not communicated www.specificsoftware.com 6
Slide 7: The Confusion also creates an Opportunity www.specificsoftware.com 7
Slide 8: What you can do for your clients.. Better explanation of mod Communicate the KEY CONCEPTS of experience rating Anticipate changes in the mod www.specificsoftware.com 8
Slide 9: Using ModMaster is Incredibly Easy www.specificsoftware.com 9
Slide 10: Data you will need Losses for experience rating period Payroll for experience rating period Experience rating period is usually three years excluding most recently completed policy period. For 6/1/2006, this is 6/1/02-5/31/03, 6/1/035/31/04, 6/1/04-5/31/05 www.specificsoftware.com 10
Slide 11: Where do you get the data? Current mod sheet Company records Insurance carrier NOTE>> Even if you can’t get data before mod is promulgated – the mod analysis is extremely valuable! www.specificsoftware.com 11
Slide 12: ModMaster Analyses ModMaster users find a lot of different ways to use ModMaster Three main uses:    Project the mod and prevent surprises See impact of changes in data Analyze & provide insight (THE KEY CONCEPTS) www.specificsoftware.com 12
Slide 13: ModMaster Main Menu www.specificsoftware.com 13
Slide 14: ModMaster Setup Data Step 1: Enter Setup Data www.specificsoftware.com 14
Slide 15: ModMaster Payroll Data Step 2: Enter Payroll Data www.specificsoftware.com 15
Slide 16: Step 3: Enter Small Loss Data: Losses Under $5,000 grouped ModMaster Small Losses www.specificsoftware.com 16
Slide 17: ModMaster Large Losses Step 4: Enter itemized / large losses www.specificsoftware.com 17
Slide 18: ModMaster Mod Summary Step 5: Perform the Calculation www.specificsoftware.com 18
Slide 19: ModMaster Reports & Graphs 29 reports & graphs Formatted & ready to print Reports tell a story Reports communicate the KEY CONCEPTS www.specificsoftware.com 19
Slide 20: ModMaster Reports & Graphs www.specificsoftware.com 20
Slide 21: Bureau report “Bureau Type” format Familiar format for communicating the mod Sample report www.specificsoftware.com 21
Slide 22: www.specificsoftware.com 22
Slide 23: www.specificsoftware.com 23
Slide 24: Mod Impact on Premium Analysis Communicate four key numbers     Average Mod (what competition is paying) Current Mod (what the client is paying) Minimum Mod (how low the mod could go) Controllable Mod (what’s on the table) Key Concepts #1 and #2 Sample report www.specificsoftware.com 24
Slide 25: YOU pay The “average” competitor pays What you are paying could be this LOW! This is what you can control AND potentially SAVE through loss control www.specificsoftware.com 25
Slide 26: www.specificsoftware.com 26
Slide 27: Loss Analysis by Policy Period Compare actual vs. expected losses by policy period Identify trends and anticipate changes Communicate the basic theory of experience rating: actual vs. expected Key Concept #3 Sample report www.specificsoftware.com 27
Slide 28: The “bad” year will remain! The “good” year will leave! www.specificsoftware.com 28
Slide 29: Ratio Analysis Compare actual to expected Primary losses (measure of frequency) Excess losses (measure of severity) Key Concept #4 and #5 Sample report www.specificsoftware.com 29
Slide 30: www.specificsoftware.com 30
Slide 31: www.specificsoftware.com 31
Slide 32: Specific Loss Sensitivity Show the “true” cost of a loss due to increased premiums One of the most eye-opening reports Key Concept #6 Sample report www.specificsoftware.com 32
Slide 33: Both claims had $4,500 in medical, but the TN claim also had $750 in indemnity BACK TO WORK MATTERS The $750 in indemnity payments cost $6,315 in increased premium. Too bad they couldn’t get this employee back to work! www.specificsoftware.com 33
Slide 34: Aggregate Loss Sensitivity A “What if” report showing mod and premium at different loss levels Helps planning and goal setting Key Concept #7 and #8 Sample report www.specificsoftware.com 34
Slide 35: CUT LOSSES 50% MOD DROPS 24 POINTS PREMIUM DROPS $11,874 www.specificsoftware.com 35
Slide 36: Three Year Cost of Losses Two separate reports  Three Year Premium Cost of Various Losses   Looks at a broad range of losses Computes three year cost and premium to loss ratio Looks at small losses ($50 to $500) Computes three year cost (ERA and non-ERA)  Three Year Premium Cost of Small Losses   Reinforces Key Concept #6 and #8 Sample report: Various Losses Sample report: Small Losses www.specificsoftware.com 36
Slide 37: WOW! Employers pay for their losses! www.specificsoftware.com 37
Slide 38: Keeping claims “medical only” saves a BUNDLE! www.specificsoftware.com 38
Slide 39: Loss Identifier Report Sorts impact on mod by Loss Identifier field We used Employee Name for example Reinforces Key Concept #9 Sample report: Loss Identifier Report www.specificsoftware.com 39
Slide 40: Modification Summary Summary of key values in calculation Good report for “analytical” clients    Shows mod formula Shows specific numbers for client’s mod Shows calculation of the minimum mod Sample report www.specificsoftware.com 40
Slide 41: www.specificsoftware.com 41
Slide 42: www.specificsoftware.com 42
Slide 43: Mod Snapshot One page that says it all      Key values Impact on premium analysis (mod breakdown) Specific loss sensitivity Losses by policy period The mod formula Sample report www.specificsoftware.com 43
Slide 44: Show the key numbers for the analytical types Highlight the Minimum and Controllable Mod! Discuss each loss impacts the mod and premium paid Introduce “actual” vs. “expected” and the three year period. Show the formula and how the mod is computed www.specificsoftware.com 44
Slide 45: Pause for some observations Employer pays for a large part of workers comp claims through changes in the mod ModMaster helps make the point Study: Most lost time claims can be avoided ModMaster showed us: lost time turns a med only into a very expensive claim Communicate the KEY CONCEPTS Move clients away from “low bid” mentality to “ownership” and long term solutions – resulting in increased client retention. www.specificsoftware.com 45
Slide 46: Help is available Priority support form on the web www.specificsoftware.com FREE online training videos  CLICK ON “SUPPORT” Robust FAQ database Articles & Newsletters Toll free technical support  800-929-4052 x 201 support@specificsoftware.com 46 E-mail support  www.specificsoftware.com
Slide 47: THANK YOU!! Call us at 800-929-4052 A Previous version of this presentation is on the web at www.specificsoftware.com/keyconcepts www.specificsoftware.com 47
Slide 48: Experience Rating KEY CONCEPTS #1 Know the employers minimum mod #2 Determine the part of the mod the employer can control #3 Compare employer’s total losses to industry average and know the trend www.specificsoftware.com 48
Slide 49: Experience Rating KEY CONCEPTS #4 Determine if the employer is having too many losses (frequency) #5 Determine if the employer’s losses are too large (severity) #6 Determine the impact each loss has on the mod and the ultimate premium paid www.specificsoftware.com 49
Slide 50: Experience Rating KEY CONCEPTS #7 Know how the mod and premium change with aggregate changes in losses #8 Understand the significant impact on the mod and premium when small losses are kept as medical only. (NOT AK, CA, CO, DE, GA, IA, LA, MA, MO, NJ, NM, NY, OR, PA, TX) #9 Know the cost of injuries, in terms of increased premium that will be paid, by employee name. www.specificsoftware.com 50