The worker’s compensation experience modification rate is a number insurance companies use to help determine workers comp premiums – it is a safety score. You might also refer to it as comp mod, experience mod, EMR, and an X-Mod.
So what is a good experience mod rate? Let’s discuss.
Understanding The Experience Mod
Your X-Mod represents your company’s likelihood of having injuries in the future, based upon your company’s actual losses and expected losses. The experience mod takes into account your company’s size, industry, and payroll.
What is a Good Experience Mod Rate?
Let’s look at where companies sit based on their mod:
- 1.00- If your company has actual losses that equals expected losses. This is the average compared to others in your industry, meaning your company is performing as actuarily expected.
- 1.01 and Above- If your company suffers more actual losses than expected losses. Your loss history is worse than the industry’s average.
- 0.99 and Below- If your actual losses are below the expected losses, it means your X-Mod is better than the industry average.
A “good” experience mod is a mod below 1.00. However, that doesn’t mean you are the best you can be and that you should stop striving to improve your mod. The best possible mod is called a minimum mod. You can read more about that in our blog “What is a minimum experience mod?”.
How Do I Get the Best Experience Mod Rate?
By working with a workers comp professional, they will be able to provide an experience mod audit. This audit allows them to tell you your best mod value while also discussing ways to reach it. Things in an audit include:
- Validating mod accuracy
- Pinpointing incident/claim data
- Seeing if claims are being reported accurately
Your work comp professional can help you put together a step-by-step plan after performing an audit. Some things that may be included in that plan are:
- Implement a Return-to-Work program
- Prioritize safety in their workplace with a written safety plan
- Streamlining an Accident Investigation Program
Truthfully, it all depends on your company’s needs. Here are some additional tips on reducing your mod.
Why Does the Rate Matter?
The higher your mod, the more insurance companies increase your premium to mitigate risk. This value can stick with you for 3 years. You could be paying more in workers comp premium than you have to.
For instance, if a company with a $52,000 workers compensation premium maintains an experience mod score between 0.7-0.8 they are receiving a 20% to 30% credit discount. That means the company now is getting a credit and paying somewhere between $36,400 to $42,000, but if the mod score is above 1.0, the company will not be getting that credit and they could be paying more than $52,000.
The Bottom Line
Overall, an X-Mod of 1.00 is average- but the lower it goes, the better it is for your business and the insurance company. Reducing your company’s Experience Modification helps cultivate a safer workplace.
Have your agent reach out to us at [email protected] to accurately calculate your X-Mod and get you on the right track to reduce workers compensation costs.