Your Experience Modification Rate (EMR or “Mod”) is one of the most important factors in determining your Workers Compensation premium. It reflects your company’s historical loss experience compared to others in your industry. A Mod below 1.00 can significantly reduce your costs, while a Mod above 1.00 can increase premiums, limit market options, and even impact your ability to win contracts.
Understanding how your Mod works—and how to actively manage it—can lead to meaningful long-term savings and stronger control over your Workers Comp program.
How the Experience Modifier Is Calculated
Your Mod is calculated using several years of payroll and claims data, typically looking back three policy years, excluding the most recent year. The calculation weighs both the frequency and severity of claims, with frequent small claims often having a greater negative impact than one large, isolated loss.
Insurance rating bureaus compare your actual losses to expected losses for your industry and job classifications. The difference determines whether your Mod goes up or down.
Why Many Businesses Overpay Without Realizing It
Many employers accept their Mod as a fixed number, assuming it cannot be changed. In reality, Mods can often be improved through better claims management, accurate payroll reporting, and proactive safety efforts. Errors in class codes, payroll audits, or claims data can inflate a Mod unnecessarily.
Without regular review, businesses may continue paying higher premiums year after year without addressing the root causes.
Reducing Claim Frequency Through Safety and Training
Claim frequency is one of the biggest drivers of a high Mod. Implementing consistent safety training, enforcing workplace protocols, and addressing hazards early can dramatically reduce the number of claims filed.
Simple steps such as documented safety meetings, proper onboarding training, and clear reporting procedures can make a measurable difference over time.
Managing Claims the Right Way
How a claim is handled matters just as much as whether it happens. Delayed reporting, lack of communication, and poor return-to-work planning can increase claim costs and extend lost time.
Active claims management includes reporting injuries promptly, staying involved with adjusters, ensuring appropriate medical treatment, and supporting injured employees through recovery. A well-managed claim often costs less and closes faster, helping protect your Mod.
Return-to-Work Programs That Actually Work
Return-to-work programs allow injured employees to come back in modified or transitional roles while they recover. This reduces lost-time claims, lowers overall claim costs, and supports employee morale.
Carriers and rating bureaus view strong return-to-work programs favorably, and over time, these programs can have a positive impact on your Experience Modifier.
Reviewing Classification Codes and Payroll Accuracy
Incorrect class codes or overstated payroll can artificially inflate expected losses and distort your Mod calculation. Regular audits of job classifications and payroll reporting are essential to ensure accuracy.
Skyscraper Insurance reviews class codes and payroll allocations to confirm employees are classified correctly and that exposure data reflects actual operations.
Understanding the Time Lag and Planning Ahead
Improving your Mod does not happen overnight. Because Mods are based on historical data, changes made today may take time to reflect in your rating. However, early action creates momentum and leads to sustained savings in future policy years.
Planning ahead allows businesses to align safety efforts, claims strategy, and renewal timing to maximize results.
How a Mod Analysis Can Uncover Savings
A detailed Mod analysis reviews loss runs, payroll data, claim status, and reserve accuracy. Many businesses discover closed claims that are still affecting their Mod, reserves that could be challenged, or data errors that should be corrected.
Skyscraper Insurance provides free Mod analyses to help employers understand where their Mod stands today and what steps can be taken to improve it.
Lower Your Mod, Lower Your Costs
Your Experience Modifier is not just a number—it is a reflection of how your Workers Compensation program is managed. With the right strategy, oversight, and guidance, it can be improved.
If you are serious about reducing Workers Comp costs, now is the time to mind the Mod and take control of your risk profile.
