Workers comp
Your experience mod, explained.
≈ 3 MIN READ
Somewhere on your workers comp paperwork is a number that quietly multiplies your premium: the experience modification factor, or "mod." It's one of the few parts of your insurance pricing you can genuinely influence — which makes it worth three minutes to understand.
What the number means
The mod compares your actual workers comp losses over a rolling window (generally the three completed policy years, excluding the most recent) against what businesses of your size and classification would be expected to lose. The benchmark is 1.00. Run better than your peers and your mod drops below 1.00, discounting your premium; run worse and it climbs above, surcharging it. A 1.20 mod means roughly 20% more premium than baseline; a 0.85 means 15% less. Your payroll and rates set the size of the bill — the mod scales it.
Frequency hurts more than severity
The formula's most important quirk: many small claims damage your mod more than one large claim of the same total cost. The system treats frequency as a signal — a pattern of injuries suggests something systemic, while a single bad event can be bad luck. Practically, this means the path to a better mod runs through preventing the routine injuries, not just the catastrophic ones.
Why it matters beyond premium
In construction and energy especially, the mod has become a gatekeeper: project owners and general contractors often screen bidders by mod, and a number above a stated threshold can keep you off the bid list entirely. At that point the mod isn't an insurance cost — it's a revenue constraint.
Managing it
- Prevent the small stuff — training, housekeeping, and consistent safety habits attack frequency, which is what the formula punishes most.
- Manage open claims — open reserves count against you. Stay engaged with adjusters and push appropriately for timely closure.
- Bring people back — structured return-to-work programs reduce claim cost and duration, and both flow into the mod.
- Check the worksheet — your mod is calculated from payroll and loss data that can simply be wrong. We review mod worksheets with clients; errors in class codes or claim figures are worth correcting.
One honest caveat: the mod looks backward, so improvements you make today show up over the following years, not next month. That's an argument for starting now, not for waiting.
This article is general information, not advice about your specific situation, and not a quote, binder, or contract of insurance. Mod calculation rules vary by state and rating bureau.