Experience Mod Calculation

It’s been some time since I wrote about Michigan workers’ compensation experience modifications and how they affect your workers’ comp premiums, so, it seems time for a refresher course. Experience modifications in Michigan are promulgated out by an outside rating agency that requires membership from all Michigan insurance companies. We submit to them data on every policy six months after it expires. We report payroll by class code and losses for every employer

This agency then produces an individual experience modification that is used by all insurance companies. To better walk you through this process, I’ve attached an exhibit with some letter designations for certain sections. Here is a simple explanation of the entire calculation.

By Donna Motley, Vice President of Claims

When someone tells you they have “good news” and “bad news” – which news do you want to hear first? For me, it depends on what kind of mood I’m in at the moment. As we all know, we are still feeling the aftershock of COVID-19 – and maybe will for a long time to come. One of the negative events was termed “The Great Resignation”. Employees resigned from their employment in record numbers. A large segment of those ending their employment were of, or nearing, retirement age. This resulted in a large loss of “experienced and skilled” employees. This loss of experience has a major impact on the employer, regardless of the industry; industrial, hospitality, construction, trucking, etc. This is bad news for employers.

After two years, The Great Resignation has morphed into “The Great Reshuffle”, meaning a significant number of employees that resigned (or were let go) are now working their way back into the workforce. Some workers returning to the same industry they worked in the past; some workers are attempting new career paths. Reports indicate that in May 2020, 54% of workers 55 and older were either working remotely or unable to work at all (in their particular industry). Today, that figure has decreased to 15%. The U.S. Bureau of Labor Statistics indicates that by year 2030, one in four U.S. workers will be 55 or older. That is the good news!

By Ruth Kiefer, MSc, ARM, Vice President of Loss Control

Heat Illness Prevention Plan

Last month MIOSHA issued a new SEP regarding a Heat Illness Prevention Plan, I’ve been getting a few phone calls regarding what’s in this plan and what you need to do as employers to comply with this new emphasis plan. Yes, this does cover both inside and outside employees, new workers, temporary workers, full-time, part-time, basically, any worker who is exposed to hot and humid conditions. These conditions are becoming a bit more common than we’d like. Special attention should be placed on new and returning employees since they will need to build up a tolerance to your warm environments again.

By Chris Demeter, Senior Loss Control Consultant

Starting a new job is often filled with a variety of training. From learning the nitty-gritty of everyday life at the company – like how to access your email or where to find supplies – to sessions about the company culture, your first days on the job are typically spent learning more about what you will be doing than actually doing it. Often wedged somewhere between sessions about your company’s history and how to use your vacation hours are training sessions about safety.

While safety training is prioritized in certain fields like construction, it’s not always given the level of attention it deserves in other industries. Even though workplace injuries are three times more likely to occur in employees who have held their job for three months or less, safety training is often limited. In many cases, this is the only time that on-the-job safety is mentioned, at least until an accident happens or the company prepares for an audit.

MTM Annual Members Meeting

For over ten years, the MTM Annual Members Meeting has been held the third Thursday of October. That’s outlined in the MTM bylaws and it’s an item that staff looks forward to putting on for our members every year. For the last five years or so we’ve held it at The Inn at St. John’s in Plymouth, Michigan. We had great reviews on the location, meeting room, and food. It’s a hard place to complain about. In May, we held the second quarter MTM Board meeting. A topic that was discussed was how can we increase the number of members that attend our annual meeting. Over the last ten years, the number of attendees bounces between 100 and 150, not taking into account the two years of cancellation or scale backs caused by COVID. We were already underway for our October 2022 meeting when this discussion took us all to a new point of how could we make the meeting better, maybe try something different.

By Donna Motley, Vice President of Claims

It has been two years since the start of COVID; and COVID continues to impact our daily lives. As the virus continues to linger and spread, albeit with “variations”, our lives have had to adjust. As we attempt to regain our independence and sense of “normalcy”, society has been attempting a Return to Work. Our department has seen an increase in work injuries, primarily injuries to workers with less than a year of seniority with the employer.

For multiple reasons, injuries to employees of less than a year on the job is common. During and post COVID, employers have been faced with an exodus of employees. Now that people are having to return to work, they may attempt work in a field entirely new to them. Commencing new employment of any kind requires a certain amount of training. The work environment may be foreign to a new hire, the pace may be different from that of their previous employment. Management’s structure most likely is different from what they were previously familiar. Expectations may be different. The actual “tools of the trade” may be new to them. Maybe the new employee hadn’t worked in a year or more and they now have to be at work by 7:00 A.M.

By Ruth Kiefer, MSc, ARM

As the pandemic created a bit of a challenge for us during the past two years, it also created a fiscal challenge for MIOSHA compliance. In review, pre-pandemic era of 2019, MIOSHA issued 543 safety related violations and collected $1.38 million in fines. In 2020, they issued 352 and collected $1.07 million in fines. I have yet to find the 2021 data, so we have a gap year of 2021. With this said, you can see that they were still out conducting some visits in the 2020 year but have a lot to make up. I would like to take this opportunity to contrast the two years to show you that some of these safety violations remain a top priority in MIOSHA’s enforcement efforts and should be a top priority to address in your facilities prior to a compliance visit.

As a reminder, this is only a partial list of possible things they can look at, the above is just some of their top SERIOUS violations. These were the most common violations between the two years and with the most for you to lose in penalties. As enforcement is increasing their efforts to address their fiscal short fall, I would highly recommend that you contact your Loss Control Representative and invite them in. We can take a proactive approach to address some of the safety items that may have creeped back into your facilities over the last two years. The pandemic shifted the way we did business and ran our facilities, as we migrate back to normal, so must we all in complying with the MIOSHA standards of safety. We’d love to help you!

By Travis Halsted, ARM, COSS

June is often a month of attending graduation open houses, weddings, spending time opening pools and just enjoying the warm weather. What few realize is that June is also National Safety Month. This month is meant for people to focus on how they can keep their environment safe and free from unsafe and unhealthy conditions. This can include your home, social and/or work environments.

During many of my recent visits with policyholders, I have heard quite a few fantastic ideas on how companies are not only using National Safety Month as a way to catch up on trainings, but also as a chance to celebrate their workplace health and safety accomplishments. While many of the topics are serious in nature, and vital to learn, nothing says that we cannot make these learning opportunities fun.

Rating Evaluation on MTM

About eight years ago, MTM management thought that getting an outside rating agency valuation of MTM would be helpful to the Board of Directors and MTM members. At that time, management felt confident about our results and financial integrity, however, having an outside agency conduct their own independent evaluation would be a proof source of what management was telling the Board of Directors and members. We chose an outside rating agency called Demotech. Demotech had over 30 years of small and mid-size insurance company rating evaluations, and was a known standard for insurance company evaluations. We proceeded down that path and received an “A, Exceptional” rating from Demotech. About three years later, we received an upgrade from Demotech one step higher to “A Prime Unsurpassed.”

Even with our Demotech rating, occasionally questions arose because the rating agency used by large insurance companies is a company called AM Best. AM Best is actually an individual’s name, Alfred M. Best, who started insurance company ratings over 100 years ago. AM Best specializes in large companies, but because of its history it remains the world gold standard for insurance company ratings.

By Donna Motley, Vice President of Claims

With inflation as a 40-year high, it seems the price of everything is increasing. Medical expenses are no exception.

Workers’ Compensation wage loss benefits are established by the State of Michigan, at the beginning of the year, every year, based on the State Average Weekly Wage. These weekly benefit rates, which includes a “maximum” rate, are published “on line” on the State’s website. Remember, we only handle Michigan Workers’ Compensation claims in our office. Wage loss benefits are calculated based on the highest 39 weeks of the previous 52 weeks of gross weekly wages of the injured worker, along with the number of claimed dependents allowed by the Workers’ Compensation Act. The rate established at the time of injury remains the same for the life of the claim. There is no cost of living increase, but the rate can be decreased if a claimed dependent no longer qualifies. There are decreases in the weekly benefit once an injured worker turns 65 years old – typically 5% per year or reduction taken when the injured worker begins taking Social Security benefits. Other than that, a weekly benefit rate established in 1997 is the same amount the injured worker would receive in 2022 if they are under the age of 65. Not much we can do about an established benefit rate.

The Compensation Advisory Organization of Michigan (CAOM) is responsible for a number of tasks including promulgation of modification factors, collecting and analyzing policy and claims data from all insurers writing workers’ comp insurance in Michigan, and administration of the Michigan Workers Compensation Placement Facility. They are governed by a nine-member Board of Governors. The members are a combination of local, regional and national carriers writing workers’ compensation policies in Michigan, with each carrier represented by an officer of their company. In October 2019 MTMIC was appointed to fill the seat from which another carrier resigned, with our CFO Chris Doebler designated as our representative. In April 2021 MTMIC was appointed to be vice-chair of CAOM and in April 2022 MTMIC, our representative Chris Doebler took on the role of Chair of the organization. Chris will serve in that role for the next year and, at the April 2023 Board of Governors meeting, will take on the role of Past Chair, with the current vice-chair moving up to the Chair position. Congrats Chris!

My name is Faris Saleem, the new intern at MTM. I started my role this past March and, so far, it has been one of the best work experiences. The wide range of fields offered at MTM such as business, accounting, finance, and marketing will present new opportunities for learning. I’m excited to explore these fields and my role at MTM. Previously, I was employed in the technology space as a computer specialist at Best Buy. I’m more than happy to offer my technological background to assist the office in any way I can. This May, I will be graduating from Schoolcraft College with my Associate of Science degree. In the fall, I plan to pursue my bachelor’s degree in computer science at the University of Michigan in Ann Arbor. Outside of MTM and school, I enjoy traveling, washing my car, and building computers. I’m thrilled to continue working at MTM, and I look forward to meeting more of you soon.

The Gifts of March

Well, this will be an unusually short article. Why – because the montage of enclosed pictures tells the story better than I can. Hundreds of shops getting checks. I met MTM members I have called upon for 8 years. I met some long term members, some new members that I had not visited before. To speed the delivery process my thanks to agents who agreed to deliver checks, to MTM Loss Control staff who worked for 3 weeks delivering checks in-between Loss Control visits and to Megan Brown, VP of Sales who is the fastest driver of the delivery team. The goal was to get the money to MTM members in three weeks. A check gift is not nearly as attractive if delivered in 6 or 8 weeks. In a few locations, some checks were delivered by mail. Our least preferred delivery method. Most checks were delivered by a real person delivering to a real customer.

I hope you enjoy the pictures. A couple comments on pictures: Some MTM members (mostly ladies) are camera shy. Their comments: Really, I have to take a picture? Some of the pictures show the steps these ladies will go to, to avoid a picture. Notice the check covering the face one. Notice the robot holding the check vs the office manager. You get the drift.

Delivering $4,000,000 is very fun. Let’s do it again next March.

By Chris Demeter, Sr. Loss Control Representative

If I inspect a tool & die shop, I would more than likely find at least one bench or pedestal grinder. If you went into my garage, you would find a pedestal grinder that comes in handy when I need to sharpen my lawnmower blades, mine has three. These grinders come in many styles, sizes, and designs. Typical bench and pedestal grinders often have two abrasive wheels, or one abrasive wheel, and one specialpurpose wheel such as a wire brush, a buffing wheel, or a sandstone wheel.

Grinders operate at very high speeds – the wheels often rotate at several thousand RPMs. If a grinding wheel shatters while in use, the fragments can travel more than 300 mph, so there’s a risk for serious injury from flying fragments and the rotating wheel assemblies (including the flange, spindle end, and nut). Abrasive wheels used on bench and pedestal grinders must be equipped with safety guards. The safety guard encloses most of the wheel — covering the flange, spindle end, and nut projection — while allowing maximum exposure of the wheel periphery. The exposed surface of the wheel should not exceed 90 degrees or one-fourth of the periphery.

By Donna Motley, Vice President of Claims

Established in 1912, the Michigan Workers’ Disability Compensation Act provided the workers give up the right to sue their employer in Civil Court. In return, Workers’ Compensation is essentially a “no fault” system. If an employee is injured in the course of employment – regardless of who was at fault – unless it was an “intentional” act – the worker is compensated certain wage loss benefits and the cost of medical treatment and rehabilitation. Workers’ Compensation does not pay for “pain and suffering”.

The Workers’ Compensation Act, at 110 years old, has had multiple changes and amendments over the years. However, the ultimate goal remains the same – for the injured worker to return to their former job or another one with the same employer. A return to work is dictated by a medical professional. An injured worker cannot return to work following a work injury until a doctor provides the “O.K.”.

Owner Dividends Coming

Thursday morning, February 17th, the MTM Board met to review the recommendations from both the Board Marketing committee and the Board Finance committee. Those two committees do a preliminary review of financial results, and also structure the MTM member dividend program. At the end of the Marketing committee, a recommendation was made to the full Board for the parameters of this year’s dividend program. The following week, the Board Finance committee met to review the actuarial loss report, and the financial information provided by MTM management.

By Ruth Kiefer, Vice President of Loss Control

With manufacturing in full swing, and limited employee resources, I am sad to say that in recent months, we have had a few severe amputation injuries resulting from employees not using safety die blocks when any body part (fingers, hand, arms, torso, etc.) reaches into a mechanical or hydraulic press. These safety die blocks are required when any body parts are in between the die set, punches, and bolster plates. During these injury events, employees were either making adjustments, troubleshooting, removing parts, or doing die repair and were not using die blocks.

With the fiscal year closed, Chris Doebler our CFO has been working long hours to put the 2021 loss and financial reports for our independent actuarial team together. At the end of January, Chris and I meet with our lead actuary to review the 134-page report on the year’s loss results. Lots of detail reviewed with evaluations completed with multiple methodologies. Predicting the future value of 2021 claims that recently happened and how prior year claims are being presently handled today is as much an art as it is a science. On January 31, the actuarial team, Chris and I all agreed on the 2021 “loss numbers”. Now we quickly plug those into the financial statements for profit review.

From an overall loss review, a few findings are apparent. The 2021 year was not a get back to “normal” year that we all had hoped for back in January 2021. The COVID disruptions were different than 2020, but still a significant factor in our business and personal lives. In aggerate our members activities grew for 2020, but not back to 2018 or 2019. Maybe this slower pace contributed to a reduction in frequency of severe losses. We had no fatalities in 2021 and fewer severe losses such as amputations. That is the good news. On the bad news side, we saw an increase in losses for new employees (90 days or less). Training was an issue in nearly all these cases. We understand the pressure to produce product and get the new employees in the production process. From our accident reviews, training and supervision of the new employees is a shop challenge. While it is most challenging to take the time to train in today’s world, I can report firsthand that a serious injury is the surest way to stop all shop production. It is important to the shop’s success that we send the employee home in the same condition as they arrived in the morning.

Our Loss Control staff is focusing on that issue for our members’ benefit. My task for the next couple weeks is to work the members’ dividend through the Board Marketing, Board Finance, and then full Board meetings. Our goal is to finalize MTM members’ declaration before February 17th and then manage the print and reporting process for deliveries to begin March 1st. In the meantime, you can help our next year’s dividend by paying special attention to your newest employees.

Be safe and see you soon. – John