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Moore: Post-Pandemic Payroll Effect Causes Higher Premiums

  • National

One of the most popular questions we have received since early last year concerns the spike in experience mods, also known as E-mods or X-mods. One of the most common factors that J&L has seen over the last few years is the post-pandemic payroll effect.  Yes, I just coined that term.

James Moore

James Moore

Many business owners and risk managers have contacted us since early 2023 asking how their mods spiked in such a short period of two years or less.

Post-pandemic payroll effect

Our first step begins with a loss run analysis looking back at least four years. What we have seen is the number of accidents and reserves seems to be a constant. Many businesses are building back their operations. The payrolls may have not been what they were pre-pandemic.

If the number of accidents is the same even though payrolls have understandably decreased, there is not enough payroll to cover the risk. A 20% decrease in payroll will result in an increase in risk for an employer with the same number of accidents. The post-pandemic payroll effect kicks in and the frustration also spikes along with the mod.

The workers' comp experience rating system is a delayed system that takes time to show up in an employer’s experience rating. It may take a few to many years for the mod to stabilize.

How do we fix it ASAP?

The best method is to cover these steps:

  • Full loss run analysis for the last five years. Why five? Predictive analytics have stretched out the period that underwriters examine when writing or renewing an account.
  • Experience rating sheet analysis. Go back in time the same five years as the loss runs.
  • Claims and reserve review. Recommended if questions arise when doing the first two steps.
  • Explore other options — captives, PEOs, self-insurance, large deductible, safety consultants. If you are told, “This is your only option,” heavily question that statement.

If you have any general questions on the post-pandemic payroll effect, send us a note through our Contact Us page. If you want to attempt a DIY, feel free to use the search box to search for the four steps in the 2,000 articles on our website.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at

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