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Experience Mod Calculation Shortcut With 10 Ways To Reduce


The Experience Mod Calculation Shortcut – Back To Basics

Lately,  Experience Mod calculation questions have come into our offices at a very high rate compared to other subjects.   The Experience Mod is also known as

Simultaneous Experience Mod Calculation Formulas
Public Domain Graph

E-Mod, X-Mod, EMR, etc.   Many factors exist that can change your Workers Comp premium. The Experience Mod calculation seems to receive the most attention.

The formula can be simplified into:

What happened in our Experience Period  / What The Rating Bureau Expects To Happen  or even more simply:

Reality /  Expectations  

One big time caveat exists with the Expectations part of the formula – Expectations come from how other  similar companies to yours have performed over the past few years.

If say,  you are a construction company and construction companies have become much more safe in the state(s) that you operate and your company does not become safer, then you may have a higher Mod. Why?  The Rating Bureaus have recorded much lower claims in the Classification Codes that represent your company operations.

Insurance Concept Experience Mod calculation Vector

Their expectation of claims (Total Incurred) has lowered.

A low E-Mod does not guarantee insurance.   Market forces sometimes will cause a company with a low X-Mod to not find coverage in the conventional Workers Comp marketplace.   Many companies experienced this conundrum over the last 20 years.

How does one avoid being hit with a large E-Mod?   Safety always counts. The complete E-mod system is predicated on rewarding safe companies and penalizing the unsafe ones.

I have attended Rating Bureau seminars, webinars, conferences, etc. where the presenters remarked – so that the safe companies are not subsidizing the unsafe ones.   The NCCI changed their formula a few years ago to more heavily penalize unsafe companies.

The WCIRB has totally redone their X-Mod formula – actually twice for smaller companies.  This formula looks to also penalize unsafe companies.

Picture Of Hand Experience Mod calculation Holding Calculator

What to do? 10 Ways To Possibly Reduce Your Experience Mod

  1. Safety remains the key.  We have seen companies cutting or eliminating their safety and risk management staff – rolling the workers comp dice.  Higher penalties may now justify safety expenditures.
  2. Make sure you are classified properly.   Do the Class Codes represent what you do?
  3. Review your policy, audits, and any other material you receive such as Policy Endorsements.
  4. Reach out for assistance.  No company is an island.
  5. Start talking to your broker/agent more than just at renewal
  6. Review your loss runs all the time.  If you have online access, get to it.
  7. Always make sure you follow the Six Keys To Workers Comp Savings – written in the 1980’s by me.
  8. Search the articles here (box at top right of page)  for any questions you may have on Workers Comp.
  9. Understand that Workers Comp takes many years to correct.   Safety today = workers comp savings in the future.   This is the wrong place for immediate gratification.
  10. Look at your Schedule Rating Factor 
  11. Bonus – Join Associations and Safety Groups – we have noticed that companies that join associations and/or safety groups seem to perform better with their Mods – not sure why.   #12 may explain this one.
  12. Pay attention – companies that turn their attention to Workers Comp always save $$ in the long run.  Weed the garden.


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Experience Mod Predictions Accurate?

Experience Mod Predictions – Accuracy Depends on Who/Whom You Ask Most Experience Mod predictions can be a tedious process that has cofounded most people working

James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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