An experience modification rate, often called an EMR or mod, compares your workers’ compensation claims history to that of similar businesses. It is applied to your premium, and in construction it is often reviewed when bidding work.
How the mod works
A mod of 1.00 is considered average for your classifications. Below 1.00 suggests better-than-expected loss experience and generally reduces premium. Above 1.00 suggests worse-than-expected experience and generally increases it.
The calculation is typically produced by a rating bureau, such as NCCI or a state bureau, using several years of payroll and claims data. Not every business qualifies for a mod; eligibility depends on premium size and state rules.
Frequency versus severity
Mod formulas tend to weigh the number of claims heavily. Several small claims can affect a mod more than you might expect, which is why early reporting, good medical management, and return-to-work programs matter.
What to review
Errors happen. Reviewing the worksheet each year gives you a chance to question inaccurate data before it affects pricing.
- Your current worksheet and the years of data it uses.
- Open claims and their reserves, which may be overstated.
- Payroll and classifications reported for each year.
- Claims that may have been closed or reduced but not updated.
Why it matters beyond price
Many general contractors and project owners set mod thresholds for subcontractors. A high mod can limit the work you are eligible to bid, so safety performance can affect revenue, not just insurance cost.
Common questions
- How long does a claim affect my mod?
- Most mod formulas use a multi-year experience period that excludes the most recent policy year, so a claim can influence your mod for several years.
- Can a broker lower my mod?
- A broker cannot change the formula, but can help you review the data behind it and support practices that improve future experience.
Related
Coverage availability, terms, conditions, exclusions, and pricing vary by insurer and underwriting. This information is general and is not a representation of coverage under any specific policy. This article is educational and is not legal, tax, or risk-management advice.