Lowering the Experience Modifier

Mar 31, 2020 | Business Insurance

What is an experience modifier?

An experience modifier (EMR/Xmod) is a multiplier or a factor applied to the premium of an eligible policy. This provides an incentive for loss prevention. Workers’ Compensation rating bureaus like the National Council on Compensation Insurance (NCCI) in Florida and the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) in California calculate experience modifiers.

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EMODs vary from state to state.

There are independent bureaus in other states that do the same function. 39 of 50 states use NCCI as their official rating bureau. California, New York, New Jersey, Pennsylvania, North Carolina, Massachusetts, Michigan, Delaware, Wisconsin, Indiana, and Minnesota don’t use NCCI as their Workers Comp rating bureau.

If a company or employer has business in one of those 39 states, an eligible company or employer must comply with the rate calculated by NCCI.


An EMOD constitutes a credit or debit relevant to the amount paid for insurance that we call a premium. They apply this credit or debit even before the discounts.

If a company or employer experiences a loss that costs more on average than other companies or employer’s loss experience in the same line of business. In that case, the result is a debit e-mod or surcharge on premiums.

If a company’s loss experience costs little, it will receive a credit e-mod on its premium. The same multipliers determine the amount of each employer’s experience modification, no matter what insurance company provides the coverage. The beauty of e-mod is that it stays with the company even if the company undergoes a transfer of ownership.


All companies or employers with premiums that start with at least $4,000 a year before discounts for a three-year period are qualified for an experience modification rating.

Companies or employers with less than $4,000 premiums are not experience-rated because of their low-priced claims. Suppose an employer or company is not eligible for e-mod. In that case, they can pay the introductory industry rate for their coverage or pay the net of any appropriate adjustments from their insurance providers.

It might be complex how they calculate e-mod. But as mentioned, it has something to do with comparing one company to another in the same industry. It could be about the loss experience of a company. It could also be manning or staffing. This could also be the frequency versus the gravity of illness and injury from one company to the next.

As an employer, you must monitor your experience modifier and understand how it works. The rate calculated by a particular rating bureau will apply to your company if you qualify for the essential eligibility premium criteria set by the state.

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How a company saved money

One independent insurance agency saved a client’s experience modifier simply because the client contacted the insurance agency to verify the accuracy of his e-mod. The client was a business owner unaware of the impact of experience modification on his company’s insurance premiums.

Through a trusted insurance agent, the client discovered he was paying more because he lacked the knowledge on how e-mod applies to his company’s insurance premiums. He didn’t have much information on effective loss-prevention measures. 

With the help of an independent insurance agency, the client’s e-mod was saved because they started educating him. The insurance agency explained to that client that in any insurance, the more you use, the higher your premium. It is easy to give the default advice that employees must avoid accidents at work as that would result in claims and losses. But that was not what happened.

Instead, the client was directed to safety and training programs. They were also encouraged to invest time to improve their company’s track record to lower their experience modifier.

The client was not only able to initiate a safety program on injury prevention. But he was also able to evaluate the employee wellness activities of his company. Remember the frequency versus gravity mentioned? Small, frequent losses have more impact than hardly any.

Learning from an independent insurance agency

The independent insurance agency also taught the client to create an effective return-to-work program. The client was informed that if an injured worker does not receive wage-replacement benefits, the discount for claim costs can go up 70 percent.

The client was provided with tips by the independent insurance company on triage injuries. Some injuries can be treated within the workplace and do not require hospitalization. If those are minor cuts or bruises, they may not need to become full-fledged claims. If there is no company nurse, having managers and supervisors trained to manage injured employees based on injury triage can help distinguish insignificant injuries from injuries that require immediate medical attention. 

The independent insurance agency encouraged the client to conduct regular drills related to fire, earthquake, and other disasters as these can leave a massive setback on the business.

These drills can be included in the company’s health and safety plans. If employees and employers have a clear picture of compliance with the company’s safety measures, this can also improve the employer-employee relationship, reduce mitigation, and prevent future litigations.

The client received another critical piece of advice from an independent insurance agency. He was informed that if an injury happens in the workplace, it should be reported immediately.


A study shows fast injury reporting lowers the cost of claims. If an injury is reported promptly, patient outcomes and safety through improved management can be adequately addressed. It can also reduce medication errors and speed communication with medical assistance and insurance providers. 

These are some self-care options that an independent insurance agency gave the client to help him with his experience modifier. There may have been additional suggestions that trusted insurance agents can offer. This can save your e-mod and your business in general, so it is recommended to hear them out.

We can help!

Still struggling with your company’s EMR/XMod Rating? Call us today at Team AIS in Denver, CO, for a complimentary insurance audit and help get a better Experience Modifier. 

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