Experience Modifier……..Are you overpaying for Workers Compensation Insurance?

Experience Modifier……..Are you overpaying for Workers Compensation Insurance?

What is an Experience Modifier?


An Experience Modifier (EMOD) is a factor that is used to adjust the Workers Compensation premium of a business based on how many claims they have during a specific period of time. For companies with a good Loss Experience, the factor can lower their premium. For companies who do not have good loss experience the factor will penalize them with higher premiums.


Below are two examples of how the Experience Modifier can be both a benefit and a burden. It depends on it is managed.


This example involved a business who had a hard time getting employees to use protective gear and subsequently had several Workers Comp Claims. (With Workers Comp Claims, frequency breeds severity)


As a result, their EMOD climbed to a 1.8. This means that this company was paying 80% more than they needed to be on their Workers Comp Insurance!


In contrast, one of the lowest EMOD’s I have seen was a .74. This company prided itself on its Safety Program and other mitigating factors such as a Return to Work program. 


Because of this, they were getting a 26% discount on their Workers Comp Insurance.


This is an area where Employers have some control over their insurance premiums. If the EMOD is already high, don't be discouraged. It will take time, but the modifier can be reduced and eventually become a benefit to you.


What are you doing to manage your EMOD? Do you understand what affects it?


If you would like more information on how to manage your Experience Modifier contact us.