10 Ways to Lower Your Experience Mod

What is an Experience Mod?

Your workers’ compensation experience modification factor is a 3 digit variable number assigned by your state’s workers’ compensation board. The larger the variable, the higher your costs. The main variables that determine the calculation are your payroll numbers by classification and your 3 year claims results in relation to that payroll. Thus, bakers are compared to bakers, and iron workers are compared to iron workers. Your employee injury/claims results are then compared to that which is expected within your industry and class.

If you have a 1.0 you are considered average at best for your industry. Higher then 1.0 and your costs increase substantially. Lower than 1.0 and your costs go down. We say .80 is best practice, but truthfully it’s possible your mod can be even lower (.70, even .60).

The Impact On Your Business – You Can’t Manage What You Don’t Know

Successful firms understand that a low experience mod means a lower cost structure. They understand this is a fertile area to create a significant competitive advantage against their competition. As a result the experience modification factor can be used as a barometer to benchmark yourself against your peers. It’s especially important in some industries. For example, construction companies bidding on government work are often ineligible with an experience mod above 1.2. There is a huge opportunity cost for those companies whose mod is near or above a 1.0.