Experience mod is not a proxy for safety performance
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The 2018 World Series left in its wake memories of clutch hits, gutsy pitching, and ballet-like leaping catches. But the one memory that also stands out took place even before the first pitch was thrown, when Dodgers’ manager Dave Roberts posted his opening game lineup. The lineup was remarkably missing his three best hitters, all left-handed batters who had hit a total of 85 home runs this past season. Roberts instead went with his all-righty lineup against the Red Sox’s left-handed pitcher and got clobbered, both on the scoreboard and by the media and fans.
So why did the Dodgers’ manager keep 85 home runs on the bench? Because in the age of analytics, a 3-ring binder told him it was the best thing to do, to start the righties against a lefty and pray that the splits fall in his favor. But what Roberts failed to do was look beyond the numbers and see that his best options lie in trusting his gut, his instinct, a track record of accomplishments, and maybe a little good old-fashioned common sense. By choosing not to do this, he failed to put his team in the best position to win.
This is also what many employers are doing when they quickly pass on hiring certain sub-contractors simply because of their experience mod, even though it may not tell the entire story.
The experience mod serves a purpose, but that purpose is not as a proxy for safety performance. The experience mod was designed to enable an insurance carrier to adjust a company’s premium based on whether they are better or worse than the average company in their industry, not to measure safety.
When companies are searching out sub-contractors they often use the 1.0 experience mod as an immovable stat, and any employer north of that number need not apply. However, that number can be skewed because it reflects a three-year window. So, if a company had one bad incident in the oldest year, but a stellar showing in the most recent two years, its experience mod rating could conceivably be above 1.0. They could be disqualified from being hired… even if they have a wall full of safety plaques from the last two years.
This is not to say that the numbers shouldn’t matter, just that employers need to use the right numbers when it comes to evaluating what companies they hire. The numbers you see are not always telling the whole story. One serious injury can dramatically inflate an employer’s experience mod, but if you examine other statistics, you may find the employer is well above average in safety performance.
Employers seeking to screen sub-contractors based on their safety performance would find better results using statistics which are built to measure safety performance. The DART (Days Away Restricted or Transferred) rate measures the numbers of days injured employees have either been completely out of work or forced into modified duty as a result of their injury. DART is extremely effective in measuring injuries severe enough to cause work restrictions.
TRIR (Total Recordable Incident Rate) measures the overall rate of OSHA recordable incidents in a business. This statistic captures a more complete picture because it is measuring individual accidents rather than work restrictions.
Both DART and TRIR are leveled to a per 100 full-time employee rate, so it’s simple to compare rates between potential sub-contractors, even when those companies are very different in size. They are also both annual measures, so a bad year four years ago can’t make your current data look poor.
Using the wrong numbers is often worse than using no metrics at all. The wrong numbers can cause you to pass up the opportunity to partner with a great company. There is no question that safety performance is an issue when hiring sub-contractors, but if you are using the experience mod as the measure of safety performance, you’re doing a disservice to your business and theirs.
Would the Dodgers have won the World Series had they looked at the numbers differently and put their power bats in the lineup? There’s no way to know. We do know that contractors can be smarter about the criteria they use when qualifying subs and such criteria can help hire subs that best meet your needs. Because at the end of a business day, do you want your company to be the Red Sox or the Dodgers?
Kevin Ring, CWCA, CWCA, MWCA, is Lead Analyst at Institute of WorkComp Professionals, Asheville, NC of which we are a member. It trains and certifies independent insurance agents and their support staff to navigate the complicated workers’ compensation system and act as advocates operating between employers and their insurance companies.