Workers Compensation
The experience modification is a document, and documents contain errors
Most roofing contractors have never audited the worksheet behind their modification.
The modification multiplies every workers' compensation dollar for three years, and it is calculated from data the contractor supplied. Accuracy alone frequently improves it.
Key takeaways
- The modification is computed from payroll, class codes and claim values that can all be wrong.
- Reserves open at the valuation date are rated as though they will be paid in full.
- Return-to-work changes how a claim is weighted, not just what it costs.
- Worksheets should be reviewed against payroll records every year, before the rating period closes.
Roofing class codes carry some of the highest workers' compensation rates in construction, which means the experience modification applied to them moves more money in this trade than in most others.
It is also one of the few inputs a contractor can influence with administrative work rather than capital.
What the worksheet actually contains
The rating worksheet lists payroll by class code, expected losses and each claim at its valuation date. Every one of those figures originated somewhere that can be checked.
- Payroll allocated to roofing codes that belongs in clerical, supervisory or sales classifications
- Claims listed at reserve values that no longer reflect the medical facts
- Closed claims still carrying reserves because the valuation date passed first
- Subcontractor payroll included after an audit that was never disputed
Why reserves matter more than payments
The modification uses the claim value at the valuation date, typically six months before the policy anniversary. A claim reserved at $180,000 and eventually settled for $40,000 is rated at the higher figure for three years unless the reserve is corrected before that date.
A reserve review three weeks before the valuation date is worth more than any negotiation three weeks before renewal.
The return-to-work effect
Medical-only claims are discounted in most rating formulas, while lost-time claims are not. A modified-duty program that keeps an injured roofer productive off the roof changes how the claim is weighted and how long it runs.
This is why return-to-work is a financial program with a safety component, not the reverse.
About the author
Wyatt Duncan
Roofers Specialty, a practice of The Duncan Group
Wyatt Duncan leads Roofers Specialty, the roofing contractor practice of The Duncan Group, an independent insurance brokerage and commercial risk consulting organization headquartered in Austin, Texas.