Workers' Comp Experience Modification
Your EMOD Is the Biggest Lever on Your Workers Comp Cost
Your experience modifier (EMOD) is the single biggest lever in your workers comp pricing. An EMOD above 1.0 means you pay more than your industry average. Below 1.0 means you pay less. The underwriter applies your EMOD directly to your base rate. Understanding how EMOD works tells you why your workers comp cost is what it is and how to move it.
EMOD break-even point
Of claims history that builds your EMOD
Cost difference between 0.8 and 1.2 EMOD
EMOD improves with better safety
Key Workers Comp Factors
Claims Frequency
How often you have claims matters more than how severe they are. Frequent small claims raise your EMOD more than one large claim.
Claims Severity
The total cost of your claims versus your industry average feeds your EMOD. Severe claims with large payouts push it up.
Industry Average
Your EMOD compares your claims to your industry average. A 1.0 EMOD means your claims match the average for your class codes.
Three Year Window
Your EMOD is built from three years of claims history, excluding the most recent year. Older claims eventually roll off.
Safety Programs
A documented safety program reduces claims over time, which lowers your EMOD and your workers comp cost.
Open Versus Closed
Open claims with large reserves affect your EMOD differently from closed claims with final costs.
What a Workers Comp Experience Modifier Actually Is
Your experience modifier (EMOD or XMOD) is a number assigned by your state rating bureau that scales your workers comp base rate based on your claims history. An EMOD of 1.0 means your claims experience matches your industry average. Above 1.0 means your claims are worse than average, and you pay more. Below 1.0 means your claims are better than average, and you pay less. The underwriter applies your EMOD directly to your base rate.
- EMOD is assigned by your state rating bureau, not the PEO
- 1.0 means your claims match your industry average
- Above 1.0 means you pay more than average
- Below 1.0 means you pay less than average
- It is built from three years of claims history
- The underwriter applies it directly to your base rate
How EMOD Directly Scales Your Workers Comp Cost
The math is simple. Your base rate multiplied by your EMOD equals your modified rate. If your base rate is $5.00 per $100 of payroll and your EMOD is 1.2, your modified rate is $6.00. If your EMOD is 0.8, your modified rate is $4.00. That is a 50 percent difference in workers comp cost for the same business with the same payroll, driven entirely by the EMOD.
How to Lower Your EMOD and Your Workers Comp Cost
Your EMOD is built from three years of claims history. You cannot rewrite the past, but you can improve your future EMOD by reducing claims starting now. Implement a documented safety program. Report claims promptly and manage them actively. Return injured employees to work quickly through light duty. Over time, fewer and smaller claims lower your EMOD, which lowers your workers comp cost at every PEO you work with.
Experience Modification FAQ
What is a workers comp experience modifier (EMOD)?
How much does EMOD affect workers comp cost?
How is my EMOD calculated?
Can I lower my EMOD to reduce my workers comp cost?
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