As an employer, if you have had a workers’ compensation claim you are probably aware of and keenly sensitive to your workers’ compensation experience modifier. Not only does it have a direct impact on the cost of workers’ compensation insurance, but also having a favorable experience modifier is often required to work on certain projects. Given the importance of the “mod” to your business, we thought it would be important to review some basic information about how it is calculated and equip you with some strategies for making sure it is at the lowest possible.
At the most basic level, your organization’s experience modifier is a measure of whether your organization is likely to have either more or less claims than another company performing similar operations based on claims history. Having a low mod, below a 1.00, results in a credit on your workers’ compensation premium and having a high mod, or above a 1.00 results in a debit on your workers’ compensation premium. While the calculation is somewhat complex, knowing some key facts about how it is calculated can help your risk management strategy maximize its impact on your mod and workers’ compensation cost.
