Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Experience Mod Increases While Loss Runs Show No Changes – WTR?


Upset Reader Says Experience Mod Increases – Loss Run Had No Changes

One noticeable complaint tread from our article and newsletter readers recently comes from Experience Mod increases while their company’s loss runs show no changes.

chart of experience mod increases over time
Wikimedia Public Use License – Hellisp

Many of them have become clients to have J&L examine their loss runs compared to the Experience Mod increases.

By the way, WTR is a clean replacement for WTF.  It is What’s The Reserve?

Two Quick Definitions

Experience Modification Factor – (E-Mod or EMR or X-Mod) – the rating bureaus (WCIRB – California, and NCCI – 40 states) compare your company’s Actual Losses with businesses similar to yours (Expected Losses).

Loss Runs – your company’s insurance carrier provides a listing of your claims that you have had while insured by that carrier.

Why your Experience Mod Increases With The Same Total Losses

Your losses on your loss run are usually broken up into three categories each having paid, reserved, and total incurred figures.

  1. Indemnity – benefits paid directly to the injured employee such as weekly Temporary Total, etc.
  2. Medical – paid to medical providers for treatment
  3. Expenses – paid by the carrier to adjust the files


One of the main concepts to remember is the Expenses figure.   Unless your company has a special agreement such as with Large Deductible policies #3 above is not responsible for Experience Mod increases.   Why?

Because Expense figures never show up on Experience Modification sheets that contain the Total Incurred figure the carrier reports to the rating bureaus.

Expenses are: (Also known as allocated expenses or ALAE)

  • Attorney fees to defend the file
  • Private investigator fees
  • Rehabilitation nurse fees – (debatable)
  • Any fees the carrier pay for adjusting the file

Under the Radar Experience Mod Increases

Example Graph of Experience Mod Increases expenses
Wikimedia Commons – Farcaster

One thing should be said now – I have not seen except in a few instances where the claims adjusters have intentionally increased the reserves to affect the Experience Mod.

Let us look at how an Experience Mod increases without any changes to the loss run totals.

Workers Comp File #09123ABN – no cents or dollar signs for readability.  The $182,000 is reported to the rating bureaus for figure your Experience Mod.

File #09123ABNPaidReservesTotal Incurred

The adjuster negotiates a settlement with the claimant’s attorney for $53,000.  Instead of having to go through multiple levels of approval, the claims adjuster decides to shift the Expense reserves for 28,000 to cover the settlement check.

File #09123ABNPaidReservesTotal Incurred

The carrier would now report $210,000 to the rating bureau, not the $182,00 as in the first table.   Wow, so the Total Incurred reported to the rating bureau just increased by 15.4% on this one file.  Yes, that would affect the Mod under most circumstances.

Avoiding Experience Mod Increase Confusion

This comparison means that your loss run review should examine the Total Incurred for the medical and indemnity totals when compared to the loss runs. 

Why am I bringing this up now?  Today, I reviewed two loss runs where this happened on multiple claims.

No, the claims adjuster really did nothing wrong by shifting the reserves unless it violated an internal rule.  Make sure that you separate out the Expense figures to make the  Experience Mod increases make sense.


©J&L Risk Management Inc Copyright Notice



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


Get the latest workers' comp news FREE!

This field is for validation purposes and should be left unchanged.