Work Comp Tip – Know Your Perfect Mod

An Excerpt From My Book, Simmonds on Workers’ Compensation Insurance:

Know Your Perfect Mod

If you spend more than $4,500 on your workers’ compensation premium you probably have, as part of your premium calculation, a factor known as the experience modification. It’s a calculation that compares your actual losses to the average losses of companies like yours.

The modification is expressed as a factor – you multiply your premium by the mod and that determines your final premium. A mod of .85 gives you a credit. A mod of 1.20 increases your premium.

Many consider a mod of 1.00 to be OK. After all, there is no surcharge.

I’m not satisfied with that. An experience modification of 1.00 means the employer is average. It’s the workers’ compensation equivalent of a “C” on a high school report

Your objective is the perfect mod, meaning the modification you would have if you had no losses. Measure your performance on that basis. How low your mod goes is a function of your industry and payrolls. Learn what an A+ is before you go patting ourself on the back.

I developed a tool to help insurance buyers understand the idea of the perfect mod. The software performs the calculation so you can see what an A+ would look like. The tool also provides information on the impact loss severity and frequency have on your experience modification.

Go to for access to the tool.