Compensation Averages
When it comes to worker’s compensation claims, do you know where your company stands in relation to others in your industry? This information can have a big influence on your insurance premiums.
What Is an Experience Modification Rating?
An experience modification rating, or Experience Mod, measures your company’s history of worker’s compensation claims against that of other similarly-sized companies in the same industry. In most cases the number is calculated by the National Council on Compensation Insurance (NCCI), although in some states it falls to another independent agency.
The baseline for an industry-average Experience Mod is 1.0. Each percentage point better or worse equates to one basis point change in rating. For example, if your record is 10 percent better than the industry average, your Experience Mod would be 0.90. Similarly, a rating or 1.10 would equal 10 percent worse.
Managing Your Experience Mod
Experience Mods are not determined simply by the number and amount of claims, but the types of claims can make a significant difference. Injuries that require medical treatment only, with no loss of work time, don’t negatively affect the rating as much as lost time claims do.
You should receive your current Experience Modification Rating Sheet when your annual policy renewal time comes. If you have any questions, consult your insurance agent.
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