What is an Experience Modification Factor?
Experience rating assesses whether your company’s claims experience is greater or less than average by comparing your company’s payroll and claims history with other businesses in the same industry. In California, this statistical comparison is made by the Workers’ Compensation Insurance Rating Bureau, which uses your recent policy history to compute your business’s experience modification. The “ex-mod” is a percentage factor that modifies your current workers’ comp premium. If your claims are less than the average, your premium will be adjusted downward. Conversely, if your business has had higher losses than the rest of your industry, your premium will be higher. Some states have a similar process, while others belong to NCCI for computing these “ex-mods”. There is a minimum premium level necessary to qualify, and the plan is mandatory for all qualified businesses. For California in 2006, that premium level is $28,400 over a three-year (or shorter) period. The premium level is based
