It's hard not to feel a twinge of pain when reports show that over half of all employers overpay for workers' compensation insurance by 15% to 50% due to unnecessary workers' comp surcharges. It's an enormous drain on employers' bottom lines, often goes unnoticed (or improperly addressed) and is regularly swept under the rug by insurance companies at renewal time.

So where do surcharges come from? Right off the bat, workers' comp surcharges arise when the Experience Modification Factor increases, often unnecessarily. This Experience Modification Factor, commonly known as an “e-mod” by insurance professionals, is used by insurance companies to adjust workers' compensation premiums. Every company has an e-mod, unless they self-insure their workers' comp insurance.

While commonly managed in the construction trades (because general contractors tend to frown upon hiring companies with a bad e-mod), e-mods on the whole go relatively unaddressed in other industries. But practicing good business should include knowing where your e-mod stands, as this all-important injury barometer has the single largest impact on your workers' comp premium. Bottom line; what you don't know, will hurt you.