If your business carries workers’ compensation insurance, one number on your policy deserves close attention: the experience modification factor, often called the experience mod or EMR. It can raise or lower your premium by a significant percentage, it follows your business from carrier to carrier, and it is often used by general contractors and project owners to decide who they hire. The good news is that it is largely within your control.

What Is an Experience Mod?

An experience mod compares your company’s actual workers’ compensation losses with the losses expected for businesses of your size in the same industry classifications. A mod of 1.00 is average. A mod below 1.00, such as 0.85, means your loss experience is better than expected and earns a credit, roughly a 15 percent reduction in that example. A mod above 1.00, such as 1.25, means your experience is worse than expected and adds a surcharge.

In Florida and most other states, experience mods are calculated by the National Council on Compensation Insurance (NCCI). A few states operate their own rating bureaus, such as California, New York, Pennsylvania, and New Jersey, and their formulas differ.

How the Mod Is Calculated

The calculation uses your payroll and claims from a three-year experience period. That period typically ends one year before your policy’s effective date, so the most recent year of claims is not yet included. The formula looks at:

Expected losses, based on your payroll in each job classification and the industry’s historical loss rates.
Actual losses, including paid amounts and reserves on open claims.
Primary and excess losses. Each claim is split at a threshold called the split point, which NCCI adjusts periodically. The primary portion carries far more weight than the excess portion.

Because primary losses are weighted so heavily, claim frequency usually matters more than claim severity. Several small claims can hurt your mod more than one larger claim. In NCCI states, medical-only claims, where the employee does not miss enough time to receive wage benefits, are reduced by 70 percent in the calculation, which rewards prompt reporting and early return to work.

Who Gets an Experience Mod?

Not every business has one. Eligibility depends on meeting a minimum premium threshold over the experience period, which varies by state. Smaller businesses that do not qualify are rated without a mod, effectively at 1.00.

Why Your Mod Matters Beyond Premium

Winning work. Many general contractors, municipalities, and project owners set maximum mod requirements for subcontractors, often 1.00 or lower.
It follows you. Changing insurance carriers does not reset your mod. It belongs to the business and its ownership history.
It reflects your safety culture. Underwriters view a low mod as evidence of a well-managed operation.

How to Lower Your Experience Mod

Prevent injuries. A written safety program, regular training, proper equipment, and accountability from leadership are the foundation.
Report claims immediately. Late reporting increases claim costs and the chance of litigation.
Create a return-to-work program. Light or modified duty keeps injured employees connected and can keep a claim medical-only.
Manage open claims. Stay in contact with the adjuster and injured employee, and ask that reserves be reviewed so closed or improving claims are not overstated.
Review your mod worksheet. Errors in payroll, classification codes, or claim values happen. Reviewing the worksheet with your agent before it becomes final can catch them.
Classify payroll correctly. Misclassified employees can distort expected losses and your premium.

Plan Ahead

Because the mod uses a three-year window that lags behind the current year, the safety improvements you make today will shape your premium for years to come. At Eton Bridge, we review experience mod worksheets with our business clients, help identify errors, and build strategies to bring the mod down over time. Learn more about our workers’ compensation insurance or request a business insurance quote.