What is an Experience Modification? The Experience Mod is a numerical expression of your firm’s accident and injury record compared with the average for your firm's industry. An Experience Mod of 1.00 means your firm has an average safety record, while an Experience Mod of 0.89, for example, means your firm has a good safety record that merits an 11 percent discount. An experience mod of 1.20 means the firm's accident rate is above the industry norm and raises a company's costs by 20 percent.
This Experience Mod is calculated using payroll and loss data for the oldest three of the last four years. Loss data includes paid claims as well as a "reserve" for all outstanding claims. These reserves are usually well established by the time they are used in these calculations, at least one year after the policy has expired. However, if claims are eventually settled for a different amount than reserved, the Experience Mod will be adjusted accordingly.