The experience modification factor — also called the EMR, mod, or experience mod — is a multiplier applied to workers compensation premium based on an employer's actual claims history compared to expected claims for their industry. A mod below 1.0 reduces premium. A mod above 1.0 increases it. For accounts with a high EMR, placement can be challenging, and agents need to know how to present the account effectively.
The experience mod is calculated by a rating bureau (NCCI in most states, or a state-specific bureau) using 3 years of claims data — the most recent 3 policy years excluding the current year. The calculation compares the employer's actual losses to the expected losses for an employer of similar size and industry. If actual losses are lower than expected, the mod is below 1.0. If higher, the mod is above 1.0.
Not all accounts are eligible for experience rating. Accounts must meet a minimum premium threshold — generally $5,000 to $10,000 in annual WC premium, depending on the state. Below that threshold, the account is not eligible and the mod does not apply.
Many standard carriers will not write accounts with an EMR above 1.25 or 1.50. Accounts with a high mod often need to go to surplus lines markets at a higher premium. When presenting a high-mod account, agents should include a narrative explaining the loss history — what happened, what corrective actions were taken, and whether the losses are trending in the right direction. A single large claim from a prior year looks different from repeated small claims over three years.
The EMR formula weights frequency more heavily than severity for smaller claims. Many agents don't realize that a client with three small claims may have a higher mod than a client with one large claim of the same total value. This means frequent minor claims — sprains, minor cuts, small falls — can be more damaging to the mod than occasional serious injuries. Agents who educate clients about this can help them manage their mod over time.
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