The experience modification rate (E‑Mod) is a factor that adjusts your workers' compensation premium based on your past loss experience, and you can find it by checking your latest workers' comp policy, logging into your insurer’s portal, or contacting your broker directly.

Understanding where the E‑Mod lives and how it’s calculated helps you manage costs and stay competitive.

What Is an Experience Modification Rate?

An E‑Mod, short for experience modification factor, is a numeric value—usually between 0.00 and 3.00—that reflects the frequency and severity of claims your business has filed compared to other businesses in the same class code.

• 0.00 to 1.00 means you have fewer or less severe claims than the average.
• 1.00 is the state average.
• Above 1.00 indicates higher than average losses, which raises your premium.

The factor is calculated by the rating bureau that services your state, such as the National Council on Compensation Insurance (NCCI) or a state‑specific bureau like the WCIRB.

Why the E‑Mod Matters to Employers

Workers' comp premiums are a major operating expense for most businesses. Since the E‑Mod directly multiplies the base premium, a small change can mean hundreds or thousands of dollars difference each year. A lower E‑Mod can also improve your credibility with clients and insurers, especially if you bid on contracts that require proof of safety performance.

How to Locate Your E‑Mod

There are three common ways employers discover their current E‑Mod:

1. Policy documents: Your most recent workers' comp policy will list the E‑Mod on the declarations page. Look for a line labeled “Experience Modification” or “E‑Mod.”
2. Insurer or broker portal: Most carriers provide online access where you can view rating details. Log in and navigate to the “Rating” or “Policy Summary” section.
3. Direct request: Call your broker (for example, The Workers' Comp Experts at 859-407-4888) and ask for the latest factor. We can pull it from the rating bureau and explain any recent changes.

If you cannot locate the factor, request a copy of the most recent Experience Rating Statement from your insurer. This statement breaks down the calculations used to arrive at the E‑Mod.

Understanding the Components of the Calculation

The rating bureau uses three key inputs:

• Actual losses: The total paid losses (medical, indemnity, and related expenses) for the rating period, usually the most recent three‑year calendar.
• Expected losses: A benchmark based on the state’s average loss cost for each class code you hold.
• Weighting factors: Adjustments for payroll size, claim frequency, and any “special” losses such as catastrophic events.

The formula is essentially:
E‑Mod = (Actual Losses ÷ Expected Losses) × Weighting

Because the calculation uses industry‑wide data, “rates vary by state and class code — verify current loss costs with your broker.”

Interpreting Your E‑Mod

Once you have the number, ask yourself:

• Is the factor above 1.00? If so, identify which class codes are driving the increase.
• Has the factor improved compared to the previous rating period? Positive trends can be highlighted during renewal negotiations.
• Do you have any “ghost policies” (inactive policies that still generate payroll for rating purposes) that might be inflating your payroll base?

Understanding the why helps you target safety improvements where they matter most.

Steps to Reduce Your E‑Mod

While you cannot change the historical loss data, you can influence future calculations:

1. Implement a safety program: Conduct regular job‑site safety talks, use lockout/tagout procedures, and enforce PPE usage.
2. Train supervisors: A well‑trained foreman can spot hazards before they become claims.
3. Prompt claim reporting: Early reporting allows for quicker medical care and can reduce claim severity.
4. Return‑to‑work programs: Light‑duty assignments help employees recover faster and lower indemnity costs.
5. Review class codes: Ensure each job is coded correctly. Over‑classifying can raise expected losses.

When you see improvements, the rating bureau will reflect them in the next E‑Mod, often within 12‑18 months.

Common Pitfalls Employers Should Avoid

Even savvy owners make mistakes that inflate the factor:

• Using outdated payroll: Payroll figures that are too high increase the expected loss denominator, making the actual loss ratio appear worse.
• Ignoring subcontractor coverage: If subcontractors are not covered under a blanket policy, their claims can be attributed to your account.
• Failing to correct coding errors: A single mis‑coded job can add several hundred dollars to expected losses.

Regularly audit your payroll and class code assignments with your broker to keep the rating accurate.

Where to Get Help

As a multi‑carrier broker, The Workers' Comp Experts can pull your latest E‑Mod from any rating bureau, explain the numbers, and suggest cost‑saving safety initiatives. Our workers' comp insurance services are designed for employers who want a clear view of their risk profile.

Visit our team page to meet the licensed agents who specialize in your industry, or explore related insights on our blog.

FAQ

Q: How often does my E‑Mod change?
A: Most rating bureaus update the factor annually after the rating period closes, usually in the spring. Changes reflect the prior three‑year loss history.

Q: Can I negotiate a lower premium if my E‑Mod is high?
A: You can discuss loss‑control discounts or alternative rating plans with your broker, but the E‑Mod itself is a statutory factor that carriers must apply.

Q: Does the E‑Mod affect my workers' comp insurance in other states?
A: Each state has its own rating bureau and may calculate a separate factor. If you operate in multiple states, you’ll have a distinct E‑Mod for each jurisdiction.

Q: What is a “ghost policy” and does it affect my E‑Mod?
A: A ghost policy is an inactive policy that still reports payroll to the rating bureau, inflating expected losses. Cancel or consolidate unused policies to avoid this.

Q: How can I verify the loss costs used in my E‑Mod?
A: Ask your broker for the latest loss cost tables from NCCI or your state bureau. These tables show the average cost per $100 of payroll for each class code.

Take Action Today

Knowing your experience modification rate is the first step toward controlling workers' comp costs. If you’re unsure where to find your E‑Mod or want help interpreting it, let our experts guide you.

Get a free policy review — call 859-407-4888 or request a quote.