Employers with better-than-average safety records expect to pay less for workers’ compensation. The experience modification rate, or mod, is a factor that adjusts the manual premium up or down based on the individual employer’s actual loss history compared with the expected losses for its industry and size.

A mod of 1.0 is average. Below 1.0 produces a credit; above 1.0 produces a debit. The calculation uses several years of payroll and loss data, with larger losses often capped so that a single catastrophic claim does not dominate the result. Rating bureaus or state funds typically compute the mod.

Because the mod directly affects premium, employers invest in safety programs and claim management to improve it. Small employers may be experience-rated only after reaching a premium eligibility threshold. Understanding the mod calculation helps employers focus loss-control efforts where they will most improve the rate.

• Factor adjusting workers’ compensation premium for loss history
• Below 1.0 is a credit; above 1.0 is a debit
• Based on several years of payroll and claims data
• Incentivizes workplace safety and claim control