INSURICA

DeMarcus Strange

Organizational Risk Steward

DeMarcus Strange, SSH, SMP, RIMS-CRMP, is a Risk Control Manager with INSURICA. Through risk management consulting and educational presentations, including The EMOD Matrix: What It's Really Costing You, he helps business leaders connect workplace safety, organizational culture, and business performance.

In the movie The Matrix, Morpheus offers Neo a choice: take the blue pill and continue believing the world is exactly as it appears, or take the red pill and discover what's happening beneath the surface. I use this concept in a presentation I deliver to business owners and leadership teams called The EMOD Matrix: What It's Really Costing You. The presentation challenges leaders to look beyond workers' compensation premiums and recognize the hidden costs, missed opportunities, and leadership decisions influencing their experience modifier.

Most business owners know their experience modification rating (EMOD) exists. Some know whether it's above or below 1.00, while others only hear about it when their insurance renewal arrives. But what if the real cost of a poor experience modifier isn't simply higher premiums? What if it's a contract you never had the opportunity to bid on, an employee who never returned to work, or a reputation you've spent years building? That's where the conversation becomes bigger than insurance. It becomes a conversation about leadership.

Safety Is a Leadership Responsibility

Throughout my career, I've seen organizations approach workplace safety differently. Some focus primarily on regulatory compliance, while others recognize safety as an essential business responsibility. When employees arrive at work, they trust their employer to provide reasonably safe working conditions, address hazards, and make responsible operational decisions. Leaders have a moral responsibility to honor that trust, along with a responsibility to protect customers, contractors, and others affected by their operations.

I've encountered more situations than I can count where employers downloaded generic safety manuals without considering whether the content reflected their actual operations. I've helped organizations address manuals containing irrelevant procedures while overlooking hazards that mattered most. Having a safety program on paper and having a functioning safety culture are two very different things. Effective safety leadership requires accountability, operational involvement, and consistent execution. When those elements are missing, the consequences can appear in injuries, operational disruptions, damaged reputations, and workers' compensation losses.

Understanding the Numbers and Hidden Costs

An experience modifier compares an organization's actual workers' compensation losses with expected losses for similar operations. A modifier of 1.00 generally represents expected experience, while higher or lower values indicate worse or better loss experience. For perspective, a company with a $100,000 manual premium and a 1.25 modifier could see that amount adjusted to $125,000 before other rating factors. At 0.80, the adjusted amount would be $80,000. Experience rating also generally gives greater weight to claim frequency than to an equivalent loss amount concentrated in one large claim. Repeated injuries may indicate underlying problems involving supervision, training, equipment, or organizational expectations. An EMOD doesn't explain why injuries happen, but it should encourage leadership to ask better questions.

Business owners often focus on visible insurance expenses without recognizing opportunities disappearing because of their loss history. In construction, for example, an unfavorable experience modifier can affect contractor prequalification. Imagine a capable contractor with the workforce, equipment, and experience to complete a multimillion-dollar project, only to be excluded because its EMOD exceeds the project owner's threshold. The company didn't lose the bid; it never had the opportunity to compete. Beyond lost revenue, safety performance influences how clients, employees, and business partners perceive an organization's reliability and professionalism. Protecting people and protecting reputation aren't competing priorities. They're interconnected leadership responsibilities.

What Happens After an Injury Matters

Even strong organizations experience workplace injuries, and what happens afterward reveals another dimension of leadership. Injured employees may face physical limitations, financial uncertainty, and concerns about future employment. A meaningful return-to-work program provides medically appropriate opportunities to remain engaged, productive, and connected to the workplace during recovery. It also offers financial benefits. Under applicable NCCI experience rating rules, qualifying medical-only claims receive a 70% reduction in the loss amount used for experience rating, while claims involving indemnity benefits generally don't receive that reduction.

The comparison illustrates why effective return-to-work programs can influence claim costs and future insurance outcomes. However, financial savings should never overshadow employee recovery. Modified duties must be meaningful, medically appropriate, and consistent with the employee's restrictions. Doing what's right for employees and what's financially responsible for the organization should reinforce each other.

Leadership Is the Difference

Workers' compensation performance isn't solely the responsibility of human resources, safety professionals, or insurance advisors. Leadership establishes production expectations, approves investments, holds supervisors accountable, and determines whether employee safety receives the same attention as profitability. An experience modifier is a lagging indicator, not a complete assessment of organizational safety. A favorable modifier doesn't automatically establish a strong safety culture, just as an unfavorable one doesn't tell the entire story. The objective shouldn't simply be lowering a number; it should be creating an organization that consistently makes better decisions about risk.

In The Matrix, Neo's perspective changes once he understands the system beneath the surface. Business leaders have a similar opportunity when they recognize the connections between workplace culture, employee recovery, claim costs, reputation, and business growth. Every leader has a choice: continue treating workers' compensation as an annual insurance expense or recognize it as an ongoing leadership responsibility. The experience modifier may be the number you see, but leadership influences the story behind it.

So, which pill will you choose?