The mod is the number on a workers’ comp policy that tells an underwriter, and some project owners, how your claims compare with other employers doing the same work. A rating bureau builds it from about three years of your payroll and claims, leaving out the current policy, and compares what you actually lost with what a business your size in your classes was expected to lose. A 1.00 is average. Below that is a credit; above it is a debit. Several small claims push it up faster than one large one, and open claims count at their reserved value, not just what has been paid. For contractors it can be a bid qualification: the University of California, for one, won’t prequalify a firm unless its mod was under 1.0 in each of the past three years.
What the number measures
Experience rating adjusts the class-based price of workers’ comp to your own record. The bureau multiplies your payroll in each class by that class’s expected loss rate to get the losses an employer your size should have, then compares your actual losses with that figure, using stabilizing values so one claim can’t throw a small shop too far off.
A mod of 1.00 is average; below it is a credit mod, above it a debit mod. Once a business meets its state’s eligibility test, experience rating is mandatory, and a mod generally applies for one year.
NCCI says 39 jurisdictions have approved its Experience Rating Plan. In Indiana, Massachusetts and North Carolina the plan applies but each state’s own rating organization produces in-state mods, and Minnesota and Wisconsin join it only for employers with exposure in two or more participating states. It does not apply in California (WCIRB), New York (NYCIRB), Delaware, Michigan, New Jersey, Pennsylvania or the four monopolistic-fund states: North Dakota, Ohio, Washington and Wyoming.
Which years count
Three years of policies go in, and the one still running is left out. Under NCCI’s plan, a policy counts if it started no less than 21 and no more than 57 months before the rating effective date. For a mod effective January 1, 2026, that generally means the policies that started January 1 of 2022, 2023 and 2024. The 2025 policy is still in force when the mod is calculated, and the insurer isn’t required to report it until 18 months after it started. New York uses the same window, and California’s runs from four years nine months to one year nine months before the rating date.
So your current policy first shows up two renewals from now, and since each renewal adds a year and drops the oldest, a policy year generally sits in three consecutive mods. Eligibility varies: NCCI states set a premium threshold, met in the most recent 24 months or on average over the period; California compares payroll times expected loss rates with a threshold WCIRB adjusts yearly.
Split point: frequency over severity
Each claim is cut at a split point. The part up to it is the primary loss, which reflects frequency and counts at full weight; the part above is the excess loss, which reflects severity and gets partial weight. NCCI’s example: ten $5,000 claims and one $50,000 claim total the same, but the ten-claim employer gets a much higher mod, because almost all of its losses are primary.
The split point is approved in each state’s rate or loss cost filing; NCCI’s guide uses $18,500 as its example. California and New York set it by the employer’s size and give the excess portion no weight at all, and California has dropped the first $250 of every claim since 2019. In most NCCI states a medical-only claim enters the calculation at 30 percent of its value, so keeping a claim medical-only matters.
Why owners set a cutoff
Some owners use the bureau’s number as a prequalification screen. The University of California’s contractor prequalification form asks whether the entity’s EMR was less than 1.0 for each of the past three premium years, and a “No” means not prequalified. A mod of exactly 1.00 fails that test. Because the form looks back three years, one bad rating stays on your answers for three cycles. Keep the worksheet with your contractor program paperwork and certificates.
Getting the worksheet and fixing the data
The payroll and claims on the mod come from unit statistical reports your insurer files with the bureau, with each claim’s incurred value marked open or closed. An employer can pull its own NCCI worksheet through the Worksheets On Demand service. In California the ratesheet goes to the insurer when the policy is written, and a policyholder can get one copy a year from WCIRB at no cost. New York employers and their authorized representatives request theirs from NYCIRB by email.
Check the classes, payroll and every claim against your records. Because the data comes from the insurer’s reports, a correction generally starts with the insurer filing a corrected report. New York recalculates the current and up to two preceding mods when a loss was misreported through clerical or processing error or the claim was non-compensable; California revises for non-compensable or subrogated claims, material ownership changes and reclassification, but not simply because a claim changed in value. Under NCCI’s plan, an ownership change must be reported to your insurer in writing within 90 days, on the ERM-14 form or a signed letter on company letterhead.
What moves the mod, and where loss runs come in
Frequency. What helps is fewer claims, getting injured workers back to work as soon as reasonably possible, and keeping medical-only claims from becoming lost time.
Reserves. The worksheet shows incurred value: paid amounts plus carrier-established reserves in New York’s plan, what the insurer has paid or expects to pay in California. An open claim counts at its reserved value, and in California a claim that later closes for less doesn’t by itself change a mod already issued.
The window. Every renewal adds a year and drops one, and older losses can develop between reports, so the mod can move with no new claims. That is the loss run connection: pull your loss runs before the insurer values the claims, go over anything closed, settled or over-reserved with the adjuster, and check the next worksheet against them. It is the work I do with contractors before a workers’ comp renewal.
Common questions
What does a mod of 1.00 mean?
Your losses over the experience period matched what the bureau expected for an employer your size in your classifications. Below 1.00 is a credit mod and above 1.00 is a debit mod. A business that doesn’t meet the eligibility test, lacks the minimum data or is new with no data gets a 1.00 factor.
Who calculates my mod?
NCCI, in the 39 jurisdictions that have approved its plan, except that Indiana, Massachusetts and North Carolina produce their own in-state mods under it. California (WCIRB), New York (NYCIRB), Delaware, Michigan, New Jersey, Pennsylvania and the four monopolistic-fund states don’t use NCCI’s plan.
How long does a claim stay on my mod?
A policy year generally sits in three consecutive mods. NCCI’s and New York’s plans count policies that started 21 to 57 months before the rating effective date, and California’s window is the same, so a policy first counts two renewals after it starts and then stays for about three ratings.
Can I dispute my mod?
You can dispute the data behind it. Because the payroll and claims come from your insurer’s reports, a correction usually means the insurer files a corrected report and the bureau recalculates. Under NCCI’s plan an ownership change goes to your insurer in writing within 90 days, often on the ERM-14 form. California won’t revise just because a claim got cheaper after it was reported, and New York’s plan has a formal appeal route for the factor itself.
Why does an owner ask for three years of mods when a mod only lasts a year?
Because prequalification forms can look back further than one rating. The University of California’s form requires an EMR under 1.0 for each of the past three premium years, so a single debit year can keep you off that bid list for three cycles even after the mod itself recovers.
Sources
- NCCI: ABCs of Experience Rating (© 1981–2025 edition, PDF)
- NCCI: Worksheets On Demand (employer access page for its own experience rating information)
- NCCI FAQs on Experience Rating Plan changes (Item E-1402, 2011–2012 split point filing), PDF posted by the Oklahoma Insurance Department
- WCIRB California: Experience Modification
- WCIRB California: Experience Period
- WCIRB California: Determining Eligibility
- WCIRB California: Experience Rating Form (ratesheet)
- NYCIRB: New York Experience Rating Plan Manual, 2022 edition with reprinted pages through January 1, 2024 (PDF)
- University of California Office of the President: contractor prequalification evaluation form (.docx)
General information about workers’ compensation experience rating as of October 2026, not legal or tax advice; NCCI’s Experience Rating Plan Manual and each state bureau’s approved plan control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.