Ex-Mod (Experience Modification Rate) 101

Ex-Mod (Experience Modification Rate) 101

If your insurance agent is talking to you about your Ex-Mod, you might be scratching your head wondering what on Earth that is and why you should even care. Here at Sava Insurance Group, we always speak to our clients in language that makes sense to you and about the “insurance stuff” that you’re actually going to find relevant. An Ex-Mods is actually very relevant to you, and it’s easier to understand than the name would imply.

What’s an Ex-Mod (Experience Modification Rate)?

Your business’ Ex-Mod is a calculation that compares your workers’ comp loss history to the loss histories of other similar businesses. The more frequent and severe your workers’ comp claims are, the higher your ex-mod will be, which in turn will cause you to pay more for your insurance.

The simplest way to understand this equation is that it’s your Actual Losses (over the last four years excluding the most recent year) divided by your Expected Losses (over that same time frame).

  • If you don’t have as many or as severe of claims as the state expects you to, you get an ex-mod that’s below 1.00, and you get a discount on your insurance premiums.
  • If you have the same claims cost as they would expect for a company of your size and nature, then you end up with a 1.00 ex-mod, and you’ll pay the normal rates.
  • If your claims cost exceeds what they expected for you to have, you end up with a number from 1.00 – 9.99.

This ex-mod number is multiplied by the premium that you would normally pay. Here are a few examples using a hypothetical business to illustrate what we mean:

  • Scenario 1: Company A starts out with a 1.00 ex-mod and pays $50,000/year for their work comp policy. After 5 years, they’ve had no claims, so when they get their ex-mod down to a .70, they now pay $35,000 and have saved $15,000.
  • Scenario 2: Company C starts out with a 1.00 ex-mod and pays $50,000/year for their work comp policy. After 5 years, they’ve had quite a few claims, and their ex-mod is now 1.50. They now pay $75,000 for their insurance premium, costing them $25,000.


How do you keep your ex-mod and work compensation costs low?

We actually have an entire blog post dedicated to how you can Lower Workers’ Comp Costs because we get this question pretty often. Feel free to check it out to learn more.

Do you have other questions about your workers’ compensation policy? Looking for a free, no-obligation quote?

Give our office a call at 860-437-7282!

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