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Measuring safety programs: E-mods and incidence rates

September 18, 2020
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Today's business world is chock-full of data. Do a little bit of digging and you can find metrics on just about anything. These metrics can help tell your company's story — where you're succeeding, where you can improve and where you stand head and shoulders above the competition.

When it comes to workplace safety, you can measure your program using metrics such as experience modification (e-mod) and incidence rates. The more information you have, the better a handle you can get on your performance. You might be surprised by what you find out.

Here's how you can use these metrics to take a closer look at your safety program.

Key workers' comp metrics

An e-mod factor is one of the components that helps determine your workers' compensation premium. Your e-mod, calculated by the National Council on Compensation Insurance, takes into account workers' comp claims processed over the preceding three years*. It compares your actual losses to expected losses for similar businesses in your state during that period, factoring in your payroll plus the frequency and severity of accidents.

Your e-mod gets applied to the premium of a qualifying policy. It's one way businesses can reap benefits for good safety records. Companies with an e-mod below 1 can potentially reduce their premiums, while those above 1 typically will have to pay more for coverage.

Incidence rates may also impact whether your bid for a project is accepted. These rates can reveal not just the number of incidents but also the number of days affected employees have been away from work. The Bureau of Labor Statistics offers a calculator to compare your incidence rate to others’ in your industry.

The Occupational Safety and Health Administration keeps a close eye on incidence rates. An uptick in rates could lead to OSHA sending inspectors to monitor your business.

What the data can tell you about worker safety

Your e-mod and incidence rates are lagging indicators of worker safety. However, you can start to build a clearer picture of your safety record and its potential impact on your workers' comp premium if you can keep an eye on reported claims, close calls and days out of work from an illness or injury, among other factors.

Having that data handy can give you a snapshot of where you stand on your own and compared with others in your industry at any given moment. As with other business metrics, context matters; you might want to add the underlying information that informs your e-mod and incidence rates to the data you review regularly. If you see something that might be a red flag, such as an increase in days out of work or a rising number of close calls at a particular machine, you can take preventive steps to address the problem before it takes a toll on your safety rating.

Now that you know where to look, you can keep track of this data and see where your efforts are yielding results for employee safety and the bottom line.

How you can improve your safety culture

Remember, your e-mod and incidence rates only tell part of the story. If they run a little high or you want to generate even better results, you can consider these steps:

1. Firm up your reporting process

Having an efficient and streamlined reporting process can help with investigations and claims processing. It can also help you learn from these incidents and plan for the future.

2. Encourage employees to have a say on safety

Help empower your employees to play a role in strengthening your safety culture and following safe work guidelines. Be open to their concerns, encourage them to report near misses and implement their good suggestions. Pinnacol has an easy-to-use safety perception survey that can help managers understand their organizational safety culture.

3. Stay on message

Consistent messaging around about safety can help improve conditions as well. You might want to review signage or consider translating signs into other languages to reach more employees. A safety committee that meets regularly can also help get out the message.

4. Celebrate safe work

If your company is meeting safety goals or your employees are embracing new safety strategies, celebrate those successes. Positive reinforcement is a great way to keep the entire team focused on safety.

Being proactive helps everyone work safely

Although incidence rates and e-mod provide valuable information, they reflect incidents that have already occurred. Setting up a proactive worker safety program that targets areas of concern can often pay off down the road. As your company continues to build a shared safety culture, it can further encourage employees to work safely and potentially lower your workers' comp premium.

Click on the "A Snapshot of Your Safety Record" infographic above for a free PDF version to print for your business

Want to learn more about what you can do to help maximize your safety efforts?

Pinnacol has the most trusted team of experts in Colorado ready to help. Contact a safety consultant or email safetyoncall@pinnacol.com to find out more about the resources available to you.

*An interval year is added between the current year that's being rated and the three-year period. The interval year is excluded because the ultimate claims costs for that year are still unknown as the e-mod is being calculated. For example, in 2020, the interval year is 2019 and NCCI would base its calculation on 2016-18.

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