How Does an Experience Modifier Impact Your Business’ Workers Comp Premium?

One of the biggest factors in determining a business’ workers compensation premium is their Experience Modification Rate, also known as the Mod. The Mod is a way that insurance companies can rate a business’ premium based off of their previous claim history. It is somewhat similar to an accident/claim surcharge or a claim-free discount on a personal lines policy. The insurance company will charge you extra if you have recent claims and give you a discount if you’ve gone a while without a claim.

The standard Mod for any given business or industry is 1.0. This means that companies with claims on their record will have a Mod above 1.0, meaning your business will pay about the industry average. Companies who are claim free have the potential to have a Mod below 1.0 and pay less than the industry average. This is essentially a “discount” on your worker’s comp premium.

So what does this mean for your business?

The National Council on Compensation Insurance (NCCI) determines the Mod for most state rating purposes. The NCCI’s Mod is mandatory and the minimum standard can’t be changed by your insurance company.​ 

Since the Mod is such a big factor in regards to the workers compensation premium, this can have a major impact on a business’ bottom line. For example, your business has had a few injuries over the past few years, resulting in claims against your workers comp policy. This may give you an experience mod of 1.6. On the other hand, your competitor down the street has been claim free for many years. This may give them an experience mod of 0.8. If everything else is the same, this means that your company is paying about 80% more in premiums than your competitor down the street!

At the Roberts Insurance Group, we work with many businesses that have higher than average experience modifiers to help get them lowered and to help businesses in our community increase their bottom line. Contact us today to see what we can do for your business.

---