What Is an Experience Modification Rate?
The experience modification rate (x-mod) adjusts your workers' comp premium based on claims history. Here's what it means and how it affects cost.
Key Takeaways
- A mod of 1.00 is average for your class codes.
- Below 1.00 means better-than-average claims experience and lower premium.
- Above 1.00 means worse-than-average experience and higher premium.
- The mod is calculated by the WCIRB from several years of claims data.
- Reducing claim frequency and severity improves the mod over time.
What the Experience Modification Means
The experience modification is a factor calculated by the WCIRB that compares your claims history to the average for businesses in the same class codes. It multiplies your base premium, so it directly raises or lowers cost.
Above 1.00 vs. Below 1.00
A mod above 1.00 generally indicates worse-than-average claims experience and increases premium; a mod below 1.00 indicates better-than-average experience and decreases premium. Medical-only claims have a reduced impact compared to indemnity claims.
How the Mod Is Calculated
The WCIRB uses several years of your payroll and claims data, comparing actual losses to expected losses for your class codes. The formula weights claim frequency and severity, so many small claims and a few large claims both push the mod up.
How to Improve Your Mod
Reduce injuries with safety programs, report and manage claims promptly, offer modified-duty return-to-work roles, and oversee claims actively. Improvements show up over several years as older claims roll out of the experience period.