An experience mod is a number used to help determine workers comp rates. The higher the mod, the more companies will pay in work comp premium.
So, what goes into determining that number? The major factor is claim’s history. In this post, we will talk about that history and provide a visual timeline to make it simple.
How is the Experience Mod Calculated?
The e-mod is calculated based on a business’ claims history over the last three years. Insurance companies will look at claim costs, frequency, and severity. The most recent three years of history are considered by the underwriter, who uses current losses and reserves when calculating the renewal premium.
Still a little confused? Here is an example.
Experience Mod Claim History Timeline
Let’s look at how Company A’s e-mod for 2023 will be determined.
The 3 most recent full years will affect the e-mod: 2019, 2020, 2021. Claim costs from these 3 years will influence the 2023 e-mod.
The current plan year, 2022, will not be used for calculating the e-mod of 2023.
What Does this Mean?
Business Owners – In this case, your past will follow you. Claims will impact your experience mod for three years and in some unique cases, potentially longer. Let’s say one year safety wasn’t a priority and injured workers weren’t returning to work. This will cost you in premium for the next 3 years, it doesn’t just go away. By working with the right work comp professionals and making safety a priority, you can take care of employees and keep workers compensation costs low, putting more money back into the business. Our team can provide a mod audit or direct you to the right work comp professional. Email us at [email protected].
Insurance Agents – Make sure you stress to clients/prospects how long claims can affect their experience mod. Help educate them and provide a mod audit to add value. Mod Advisor can provide the tools for a successful mod audit and recourses to educate clients/prospects. Schedule a demo today to see if we are the right fit for your agency.