Challenge the Incumbent with This Surefire Work Comp Strategy

Remember those old ads that promised “Use this one simple trick to save a ton of money...”? Here’s one small trick that actually works. 

That powerful tool in your arsenal for winning over prospects is leveraging the Experience Rating Adjustment (ERA) program, a crucial component of workers' comp in many states. The ERA program allows for substantial discounts on medical-only claims when managed properly, which can result in significant savings on premiums for your clients. 

However, not all agents educate their clients on how to take advantage of this program or offer the proactive claims management and return-to-work support that could reduce their mod score and, ultimately, their premiums. By positioning yourself as the agent who can reveal hidden savings and help clients lower their mod through ERA, you’ll not only challenge the incumbent but also establish your expertise as a valuable partner. 

Use this resource to educate prospects on the ERA program and cast doubt in their mind regarding their current work comp agent.

Understanding the Experience Rating Adjustment (ERA) and Its Impact 

The ERA program is a cost-modifying feature used in most states as part of the experience modification calculation. Under ERA, medical-only claims are discounted by 70% in the calculation of a company's experience modification factor (mod). This distinction is critical because it directly affects how much a company pays in work comp premiums. Here’s why ERA matters: 

1. 1. Medical-Only Claims vs. Lost-Time Claims: In many states, medical-only claims (those where the employee only receives medical treatment and no wage replacement) receive a 70% discount in the experience rating calculation. This discount does not apply to lost-time claims, where the employee misses work due to injury. 
   2. Impact on the Mod: The mod, which compares an employer’s actual losses to the expected losses for similar companies, directly affects work comp premium. The lower an employer’s mod, the less they will pay in work comp premiums. Proper management of claims to ensure they qualify as medical-only can prevent unnecessary increases in the mod. 
   3. Cost Savings Potential: For companies with effective claims management and return-to-work programs, medical-only claims lead to much smaller adjustments on the mod, resulting in lower premium costs. For companies with high-risk operations, the savings can be substantial. 

Many employers are unaware of this program or how to use it effectively, which is where proactive insurance agents can make a difference by educating them on the financial impact and helping implement practices to manage claims effectively. 

Send your prospects (and clients) this simple resource explaining the ERA program and why it matters: Are You Taking Advantage of the Work Comp ERA Program?

Why Many Employers Miss Out on ERA Savings 

While ERA offers a valuable opportunity for cost savings, many employers miss out on these benefits for the following reasons: 

1. 1. Lack of Claims Management Education: Employers may not understand the impact of mod or how medical-only claims can be managed effectively to reduce costs. 
   2. No Proactive Return-to-Work Programs: Without a structured return-to-work (RTW) program, injured employees are more likely to become lost-time claims, which don’t receive the ERA discount. Employers often don’t realize that they can bring employees back to modified duties to avoid triggering lost-time claims. 
   3. Underutilized Mod Analysis: Many agents don’t provide thorough mod analyses to their clients, missing opportunities to show clients where their mod could be reduced. This lack of information results in missed savings and potentially higher-than-necessary premiums. 

This oversight creates a prime opportunity for proactive agents to engage prospects by explaining how ERA works, performing mod analyses, and showing how better claims management could save them money. 

Positioning ERA as a Competitive Advantage 

To attract new clients and convert prospects, it’s essential to show them the potential value of ERA and what they might be missing out on due to inadequate guidance from their current agent. Here’s how you can position ERA as your unique selling point and make a compelling case for switching. 

1. Educate on the Savings Potential of Medical-Only Claims 

Start by explaining ERA and the 70% discount on medical-only claims. Break down the difference between medical-only and lost-time claims, using clear, accessible language. For example: 

“Did you know that medical-only claims are calculated at only 30% of their actual value? This means your premiums are lower when claims are managed effectively. Lost-time claims, on the other hand, are calculated at 100% and drive your costs up.” 

Most employers don’t realize the difference this can make on their overall mod score. Use industry-specific examples to make this clear, showing them the potential savings they may be leaving on the table. 

2. Highlight the Importance of a Return-to-Work Program 

Explain how a return-to-work (RTW) program helps keep claims classified as medical-only, protecting the mod from unnecessary increases. With an effective RTW program, employees can come back to modified duties rather than taking time off, keeping claims from becoming lost-time. 

“A strong return-to-work program is not just about getting employees back sooner—it’s also a cost-saving strategy. By bringing employees back to modified work, you prevent claims from escalating to lost-time status and keep your mod low. This can translate to tens of thousands of dollars in annual premium savings.” 

3. Perform a Mod Analysis to Reveal Hidden Opportunities 

Offer to perform a mod analysis for prospects, showing them where they could have reduced claims costs if they’d used the ERA effectively. A mod analysis can serve as a powerful visual tool to highlight areas for improvement and reinforce the notion that you’re the agent who can help them save. 

“Let me show you a breakdown of your mod score with a free mod analysis. I can help you see where minor adjustments in claims management could lower your mod and reduce your premiums.” 

In your analysis, highlight how different claims affected their mod and demonstrate what they could be paying if claims were classified as medical-only. This is a concrete, data-driven way to showcase the cost implications of their current program and provide a roadmap for improvement. 

4. Highlight the Incumbent’s Gaps 

Emphasize the support you provide in mod management and claims handling, framing it as a service their incumbent agent might not be delivering. Explain that while insurance policies are standard, strategic claims management and mod analysis aren’t, and that’s where you stand apart. 

“Your current agent might not be helping you manage your mod to its full potential, which could mean you’re paying more in premiums than necessary. With my approach, you’re not just getting a policy—you’re getting strategic insights into your mod score, claims handling, and a return-to-work program to keep costs low.” 

Offer Mod Support as a Long-Term Partnership 

By presenting yourself as a proactive partner in claims management, you set the stage for a long-term relationship built on savings and support. Many employers appreciate the opportunity to cut costs but may need your guidance to implement changes. 

Here’s how to structure the support you provide: 

1. 1. Quarterly Mod Reviews: Meet quarterly to review their mod and identify new claims that could be eligible for ERA treatment. 
   2. Customized Return-to-Work Programs: Work with employers to create or improve an RTW program suited to their specific roles and capabilities, enabling more flexibility in bringing employees back to work. 
   3. Ongoing Safety and Claims Management Training: Provide or facilitate training sessions on claims management and safety practices that reduce claim frequency and severity, keeping the mod low. 
   4. Regular Communication on Claims Impact: Keep employers informed about claims status, emphasizing those eligible for medical-only classification to reinforce the importance of quick action. 

Conclusion: Prove Your Value as an Agent 

By proactively educating prospects about the ERA program and offering them strategic mod management, you’re not just selling a policy—you’re presenting a unique, data-driven approach to saving money. This strategy puts you in the driver’s seat to challenge the incumbent, show the prospect what they’re missing out on, and provide a clear, actionable plan for optimizing their work comp expenses. 

While anyone can calculate a mod with the right information, the right mod software makes it much easier. Be sure to check out ModSure, a mod platform created by work comp experts that blends in-depth experience mod analysis with powerful sales strategies.