What is an Experience Modification?

Experience Modifications can help to lower the cost of your worker’s compensation costs.

Your experience modification rating, also known as your Experience Mod, is directly correlated to how much you spend on your worker’s compensation premiums. The lower your Experience Mod is, the lower your premiums will be. In order to fully understand how to use your Mod to control your worker’s comp. costs, you have to fully understand how it works.

Your Experience Mod is used to compare your worker’s compensation claims experience to other employers who operate the same type of business and are around the same size. Your Mod is the method to tailor the cost of your policy to the characteristics of your specific business. However, it will also give your business the chance to manage your costs through various measurable cost saving programs.

In order to calculate your Experience Mod, the actual losses at your company are compared to the expected losses by your industry type. Various factors are taken into consideration, including unexpected large losses, company size, and the difference between the loss severity and loss frequency.

Your Experience Mod will represent a debit or credit that is applied to your worker’s comp. premium. The industry average for a Mod factor is considered a 1.0. Mod factors that are over 1.0 are considered a Debit Mod, which shows that your losses were worse than expected, leading to a surcharge to your premium. A Mod factor under 1.0 is considered a Credit Mod, meaning the losses were better than expected, allowing for a discounted premium.

When it comes to finding the right worker’s compensation insurance policy, contact the insurance professionals at Abbate Insurance in New Haven, Connecticut. As an independent insurance agency, we will work with you to ensure all of your commercial insurance policies are meeting your needs, all at the right price.