The experience modifier is a numerical rating used by insurance companies to assess the risk of a business compared to others in the same industry. It is based on your company’s actual claims history and payroll data over the past few years, typically three years excluding the most recent policy year.
An experience modifier of:
- 1.0 indicates your claims history is average for your industry.
- Below 1.0 reflects better-than-average claims performance, leading to lower premiums.
- Above 1.0 signals higher-than-average claims, resulting in higher premiums.
For example, a company with an experience modifier of 0.80 will typically pay 20% less in workers’ compensation premiums than average, while a company with a mod of 1.20 will typically pay 20% more.
Note that not all businesses are experienced rated. Several factors determine whether a business is eligible for or subject to an experience mod, including whether it is a new venture, the amount of premium generated, its classification codes, and other state specific considerations.
Insurance companies use your experience modifier to adjust the base premium rate for your workers’ compensation policy.
For more information call your Keevily Team 1-800-523-5516