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Stabilizing Value – Work Comp EMod Formula Magical Employer Lifesaver


Stabilizing Value – Rating Bureaus Provide a Break of Sorts

The Stabilizing Value in Workers Compensation Rating Bureau Experience Modification Factor Worksheets saves companies premiums every day.   How does this boring-sounding number help employers save premium dollars?

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I am using the numbers from an EMod sheet that I have been reviewing this evening.

Basic EMod Formula

An XMod factor (EMod synonym) is represented by the very  basic formula –

EMod = Actual Losses / Expected Losses

The EMod for this insured – who will remain nameless – has these numbers

EMod = Actual Losses / Expected Losses

EMod = 551,000 / 398,000  =  1.38 <<< Ouch!   

The basic EMod Formula leaves the employer with a 38% increase to their premium formula.    Hang in there with me – this may seem boring.  The end result will be worth your time.

I want to stay on track with explaining the Stabilizing Value.    Check out these definitions for the values in the below table.

Primary Losses

Excess Losses

Ratable Excess is calculated by using multiplying the Excess Losses by the all-important Wt factor.

Whew are you confused, you will be fine.  If you are feeling number stress go see the heartwarming Mr. Rogers clip then come back.

Ok, so back to the EMod neighborhood.


Primary LossesStabilizing ValueRatable ExcessTotals
Actual138,258299,691 95,038532,987
Expected99,179299,691 68,728 467,598
Exp Mod


EMod Formula From Rating Sheets  (No Stabilizing Value)

The EMod Formula has many more steps than the basic one shown in the previous section.   So, let us look at the final numbers without using the Stabilizing Value.

E-Mod  = (Actual Primary Loss + Actual Rateable Excess Loss)  / (Expected Primary Loss + Actual Ratable Excess Loss)

E-Mod = (138,258 + 95,038) / (99,179 + 68,728) = 1,39  Ouch again.

EMod Formula From Rating Sheets – With Stabilizing Value

Looking at the above table  with the factor added in , one can see that the EMod dropped by approximately .25 from the values without any stabilization.  A 1.14 Mod, while not the best, is better than having to pay 25% more for the same workers comp coverage.

If you pull out your Workers Comp Rating Sheets, you can see how the Stabilizing and Excess Ratable values are calculated for your company.   The main reason this article was written was to show you how the Rating Bureaus cut companies some slack on their X-mods.

Besides, I only have one Mr. Rogers calming video to show you.

End Result

Actually, I found an anomaly on my client’s loss runs – which feed into the EMod Rating Sheets loss runs.   The anomaly reduced the company’s Mod below 1.0.   <<Much less of an ouch with the help of the stabilizing value.

Also Read: Stabilizing Value – Work Comp EMod Formula Magical Employer Lifesaver

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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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