Experience Mod Projections – Budget Helper
I have been asked to provide numerous types of Experience Mod projections over the years. Why do them? Let us look at an example.
One of the keys to budgeting for Workers Comp is to find out what Experience Modification Factor that your company will face in the upcoming workers comp policy year.
Experience Mod Projections – Private School

A large private school system wanted to find out what their 2023 – 2024 and 2024 – 2025 workers comp policy would look like after their January 1, 2022 renewal. Now, that is thinking ahead.
As written about often in this website, the Experience Mod systems lags six month behind to let the claims develop past the policy year. When forecasting beyond the next policy period, a number of things could happen including: (a few examples)
- Higher payroll due to growth
- Higher claim values (reserves)
- State law changes
- Classification Code changes
2023 – 2024 Policy Projection Complicating Factors
For the 2023 – 2024 policy, six month of claims and policy changes/endorsements may occur.
- January 1, 2023 policy year
- Carrier report claim values up to July 1, 2022 for the January 1, 2023 – 2024 policy year
- Six months of claims development has not yet occurred and has not been reported by the carriers.
- No predictive analytics package can estimate what the six months of claims development will be as that is up to the employees’ medical and return to work statutes and the adjuster’s reserve increase levels.
2024 – 2025 Policy Experience Mod Projections Complicating Factors
For the 2024 – 2025 policy, six month of claims and policy changes/endorsements may occur.
- January 1, 2024 policy year
- Carrier report claim values up to July 1, 2023 for the January 1, 2024 – 2025 policy year
- 18 months of claims development has not yet occurred and has not been reported by the carriers.
- Same predictive analytics conundrum
2023 – 2024 Policy Projection Solution
This will not work in all cases. Using a Mod projection tool (unnamed), the six month gap was projected using a very long tail step-wise regression formula. I know that actuaries prefer loss triangles.
I went back 10 years and projected what a 10-year loss projections would look like – yes, Excel has that package freebies if you add in the Statistical Package.
I advanced the projections ever six months and dropped off the prior six months. Wow, I had a ton of numbers.
The basis for the Experience Mod projections was performing a full loss run review for 10 years of claims. Luckily, the Budget Officer kept that data – the more numbers the better.
I projected a 1.285 or 1.29 Experience Mod. NCCI promulgated a Mod of 1.30 later that year.
2024 – 2025 Policy Experience Mod Projections Solution
I performed the same procedure for the 2024 – 2025 policy period. The private school’s CFO understood that 18 months of data needed to be added into the Experience Mod factor.
We agreed to review the Experience Mod factor projection next year. I provided a Mod projection of 1.33 for the 2024-2025 policy year using the data at hand. That number will likely change during the next year.