Experience Modification

What Does Experience Modification Mean?

Experience modification is a rating insurance companies give to employers based on past losses and projected future losses. This rating determines the worker's compensation premium they offer.

Insuranceopedia Explains Experience Modification

An experience modification rating is based on a class that the particular employer falls into. The class is composed of companies with the same business type and of similar size. Individual companies are rated according to the average rating (1.0) of their class in terms of past claims and accidents at work. If the company gets the same rating as the average or a lower one than it (1.0 or lower), they will be offered a low premium. If its rating is above average (1.1 or higher) because they have submitted a high volume of claims in the past or have numerous workplace accidents on their record, then the company will be charged a high premium.