Experience Modification Factor E-Mod Can Be Debit, Credit or Neutral
There has been much discussion in the last week on the Experience Modification Factor (E-Mod or X-Mods). My definition is your company’s Workers Comp credit score.
From NCCI – Experience modifier (mod) is a multiplier applied to the premium of a qualifying policy and provides an incentive for loss prevention. The mod represents either a credit or debit that is applied to the premium before discounts. If your company’s loss experience is more costly on the average than other company’s loss experience in your industry, the result is a debit mod, or surcharge, on premiums. If your company’s experience is less costly than the industry average, you will receive a credit mod, or discount, on your premium. The acronyms are Mod, E-Mod, or Emod.
If your Mod is equal to 1.0, you have a neutral Mod. A neutral Mod means that you receive no credit or debit from the Mod part of your calculation. Your company has the average Experience Mod for your industry judged from your associated Classification Codes. The rating bureaus such as NCCI, WCIRB, or an independent rating bureau publishes and often updates the class codes in your company’s states of operation.
From CA’s WCIRB – which are expressed as a percentage, compare the loss or claims history of one company to all other companies in the same industry. Generally, an experience modification factor of less than 100% reflects a better-than-average experience, while the same number that exceeds 100% reflects a worse-than-average experience. Accordingly, an experience modification factor that is greater than 100% usually increases the cost of your workers’ compensation premiums, while an experience modification that is less than 100% usually decreases the cost of your workers’ compensation premiums. The acronym is X-Mod or Xmod.
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