How to Improve Your Experience Modification and Reduce Workers’ Comp Premiums
What Is an Experience Modification?
An Experience Modification is a number used by insurance companies to adjust the cost of a business’s workers’ compensation insurance. It reflects the company’s safety record compared to others in the same industry. An Experience Mod of 1.00 is considered average. A lower Experience Mod means fewer claims and lower premiums, while a higher Experience Mod suggests more claims and higher costs. For example, if your Experience Mod was a .65, you would then pay 35% less than the average company in the industry, before any discounts and dividends for which you may qualify.
How Is Experience Modification Calculated?
Experience Mod is calculated by comparing your company’s actual workers’ compensation claims to their expected claims based on their payroll and industry classification codes. The calculation typically uses three years of claims history, not including the most recent year.
What Is a Good Experience Modification and Why Does It Matter?
A good Experience Mod is anything below 1.00. For example, an Experience Mod of 0.80 means your company performs 20 percent better than the industry average, which can reduce your premiums. An Experience Mod above 1.00, like 1.20, means you’re considered riskier and may pay more. Experience Mod is incredibly important because it directly affects the cost of your premiums.
How Can You Improve Your Experience Modification?
Focus on safety. Train employees, fix hazards quickly, and track near-misses. Have a return-to-work program so injured workers can recover on the job. Make sure employee job classifications are accurate. Review your claim history regularly and work with your insurance broker to spot trends or errors. We recommend you refer to our Safety Resources and Education page to find videos, infographics, and handouts that will help build a safer workplace for your employees.
Friedlander Group Can Help Your Business Improve Its Experience Modification
At Friedlander Group, we help businesses take control of their workers’ comp costs. Whether you're working to lower your rate or maintain a low rate, we offer tailored solutions that go beyond basic insurance coverage. If you’re exploring ways to improve your Experience Mod, let’s connect. As part of our concierge service, our clients receive in-depth Experience Mod reviews and guidance to help reduce or keep your Experience Mod low, such as encouraging a strong return-to-work program. This is just one of many services our clients receive. Contact us here to learn more about how Friedlander Group’s unique workers’ compensation programs maximize our clients’ productivity and profits.
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Read Safety and Workers' Compensation Strategies: To Unleash Productivity and Profits, by workers’ compensation expert Adam Friedlander, featuring interviews with successful industry leaders on why safety is the smartest investment a business can make.