Experience modification rate (EMR): what your mod means and how to lower it

The experience modification rate, also called the EMR, ex-mod, e-mod or just "the mod," is a number your insurer multiplies your workers' compensation premium by. It compares the injury claims your business actually had with the claims expected for an employer of your size doing the same kind of work. A mod of 1.00 is average. Below 1.00 is a credit that lowers your premium; above 1.00 is a debit that raises it. According to NCCI, the rating organization whose experience rating plan is approved in 39 jurisdictions, a business with $100,000 of premium pays $75,000 at a 0.75 mod and $125,000 at a 1.25 mod.

You can't buy a better mod. You earn it with fewer and cheaper claims, and you protect it by checking the data it's built on. This page explains how the number is worked out, who gets one, why contractors lose bids over it, and what you can do about yours.

What is a good EMR?

Anything below 1.00 is good: it means your claims were better than average for businesses like yours, and you get a discount. 1.00 is average. Above 1.00 means your claims were worse than expected, and you pay a surcharge on every dollar of workers' comp premium.

For contractors, 1.0 is often a hard line rather than a guide. The University of California's contractor prequalification form marks a firm "Not-Prequalified" unless its EMR is less than 1.0 for each of the past three premium years. The University of Kentucky's bidder responsibility form says firms with no EMR, or one above 1.0, may be deemed non-responsible "due to safety concerns." That's why contractors call it their EMR safety rating: owners read it as a safety record.

How does the EMR change your workers' comp premium?

The mod is the last multiplier in the premium. Your insurer works out the premium for each job class (payroll ÷ 100 × the class rate), adds the classes up, then multiplies by the mod.

Source: NCCI, ABCs of Experience Rating, Exhibit E.

Our workers' comp guide walks through NCCI's full example for a roofing company with office staff, where moving from a 1.25 mod to a 0.85 mod is worth about $50,700 a year on the same payroll. For what businesses actually pay before and after the mod, see workers' comp insurance cost.

Who gets an experience mod?

You get a mod once your workers' comp premium is large enough for your own claims history to mean something. Below that point you're rated at 1.00. Under NCCI's plan, experience rating is mandatory for every employer that meets its state's premium eligibility threshold, and you can qualify either on the premium from your most recent two years or on the average over the whole experience period. Each state sets its own threshold, so ask your insurer for yours.

Two states where we read the current rule:

• Pennsylvania: you're experience rated if your audited payroll for the experience period, priced at current PCRB loss costs, produces $5,000 or more of premium (PCRB manual, section 5, 1 April 2025 version). Smaller employers fall under Pennsylvania's merit rating plan instead: a 5% discount with no lost-time injuries, no change with one, and a 5% surcharge with two or more.
• California: the threshold was $10,800, and the WCIRB's 2026 filing proposed raising it to $11,700 for policies starting on or after 1 September 2026 (California Department of Insurance notice). Check the WCIRB for the approved figure.

NCCI also gives you a 1.00 mod if you're a new business with no data, if there isn't enough data to calculate one, if an ownership change left a gap in the data, or if the calculation simply comes out at 1.00.

Which bureau calculates your mod?

NCCI calculates mods in most states. Some states have their own rating bureau, and four run workers' comp through a state fund. If you have staff in more than one state, you can have more than one mod.

Sources: NCCI, ABCs of Experience Rating (which states use the plan); Indiana Compensation Rating Bureau, list of independent bureaus. Read 10 October 2026.

How is the experience mod calculated?

The bureau compares your actual losses with your expected losses over an experience period of about three years, gives small claims more weight than the large part of big claims, and adds a stabilizing amount so one bad year can't swing a small employer's mod wildly. Here are the parts, in the order they're used.

The experience period

NCCI uses policies that started between 57 and 21 months before your mod's effective date. For a mod effective 1 January 2026, that's the policies that began on 1 January 2022, 2023 and 2024. Your current policy isn't used, because the mod is calculated 60 to 90 days before it takes effect and insurers don't have to report a policy's data until 18 months after it starts.

The practical effect: a claim in a policy that began on 1 January 2025 first shows up in your 1 January 2027 mod, and it stays in the 2028 and 2029 mods before it drops off.

Expected losses

Expected losses are what an average employer with your payroll in your job classes would have in claims. The bureau multiplies your payroll in each class by that class's expected loss rate. A roofing payroll carries far higher expected losses than the same payroll for office staff, so the comparison is always against businesses doing your kind of work.

Primary and excess losses: the split point

Each claim is split in two. The part up to the split point is "primary" loss, which NCCI treats as a sign of how often injuries happen. The part above it is "excess" loss, which reflects how severe they were. Primary losses get much more weight in the formula.

Until 2024, NCCI used one split point everywhere: $18,500. Under its Item E-1409, each state now has its own split point, set from that state's claim costs and updated with the state's annual rate filing. NCCI's own illustration is $25,000 in a state with costly claims and $15,000 in a cheaper one. The summary page of your experience rating worksheet shows the split point used for your mod.

Each claim is also capped at a state accident limitation, so a single catastrophic injury can't count in full.

Medical-only claims count at 30%

In most NCCI states, a claim with medical bills but no lost wages enters the calculation at 30% of its value, a 70% reduction. NCCI says the rule exists to stop employers paying small medical claims themselves instead of reporting them.

Weight and ballast

The formula uses a weight (W), which sets how much your excess losses count, and a ballast value, which pulls the mod toward 1.00. Both grow with the size of the employer, so a large employer's mod follows its own claims closely while a small employer's mod moves less.

Mod = (actual primary + W × actual excess + (1 − W) × expected excess + ballast) ÷ (expected losses + ballast)

NCCI's worked example

These are the numbers from the sample worksheet in NCCI's ABCs of Experience Rating. They use the old $18,500 split point and are for illustration, not any real employer.

This employer's actual primary losses ($88,100) were above its expected primary losses ($81,573), but its excess losses were well below expected, so it came out exactly average.

Why many small claims hurt more than one big one

NCCI gives this comparison. One employer has ten claims of $5,000; another has one claim of $50,000. Both lost $50,000. At an $18,500 split point, the first employer has $50,000 of primary losses and the second only $18,500, with the rest discounted as excess. The ten-claim employer gets a much higher mod. Frequent small injuries read as a pattern; one large injury reads as bad luck.

Why do contractors' bids get screened on EMR?

Some project owners use the EMR as a safety screen, and it's hard to argue with: a rating bureau calculates it from the claims your insurer reports, not from anything you write in the bid. The University of California's prequalification form treats an EMR below 1.0 in each of the past three premium years as a pass-or-fail requirement, and the University of Kentucky warns that firms above 1.0 may be found non-responsible. Rules vary by owner and project, so read each bid's prequalification terms.

Two consequences follow. A single bad year can lock you out of that work for three mod cycles. And a new or small contractor with no mod is rated 1.00, which passes a "1.0 or less" test but fails a "less than 1.0" one. If you bid public or commercial work, see our general contractor insurance guide and the workers' comp options for construction.

How do you find your EMR?

Ask your insurance agent or insurer for your current mod and its experience rating worksheet. NCCI sends each new mod to your insurer (and, in some states, to you), and your insurer can get the worksheet free. Anyone you authorize with a signed letter of authority, such as a new agent, can buy it from NCCI's Riskworkstation. In independent bureau states, ask your agent or the state bureau listed above.

When you get the worksheet, check:

• payroll by class code for each year (look up your codes with the class code lookup or read what an NCCI class code is)
• every claim listed, its amount, and whether it's marked open or final
• that medical-only claims are flagged as medical-only, so they count at 30%
• the split point on the summary page
• whether a business you bought, sold or share majority ownership with has been combined into your mod

How to lower your experience mod

The mod looks back three years, so changes show up slowly. These are the levers NCCI's own material points to:

1. Prevent the small, frequent injuries. They load your primary losses, which carry the most weight. Fixing the hazard behind each claim is the lever that compounds.
2. Report every injury to your insurer, including minor ones. Medical-only claims count at 30%, and NCCI built that rule so employers would report them rather than pay them quietly.
3. Get injured employees back to work as soon as it's safe. NCCI says its plan is designed to reward employers who do this, because employer involvement after an injury can reduce how costly the claim becomes.
4. Fix bad data. NCCI revises mods for reporting errors, classification inspections and subrogation recoveries (when your insurer recovers a claim's cost from someone else who caused the injury). If a claim on your worksheet isn't yours, closed for less than shown, or was recovered, ask your insurer to correct its report.
5. Report ownership changes within 90 days. NCCI requires written notice to your insurer (its ERM-14 form or a signed letter) when ownership changes. NCCI can revise your current mod and the two before it after an ownership change, and businesses with more than 50% common ownership are combined into one mod.
6. Check your class codes and payroll at every premium audit. Wrong payroll changes your expected losses, and so your mod. Our workers' comp audit guide covers what auditors check.

How to dispute your experience mod

Start with your insurer. In NCCI states, NCCI's dispute resolution process covers disputes over how the mod was applied, along with class codes and the combination of businesses. Before NCCI will take it, you must:

1. try to settle it directly with the insurer,
2. pay all the premium that isn't in dispute, and
3. give the insurer a written estimate of the premium in dispute and how you calculated it.

If that fails, send a written request to NCCI Dispute Resolution Services (DisputeResolution@ncci.com) with the premium and payment details, your calculation, the documents and a record of your attempts to settle. A consultant then works with both sides, and if there's still no agreement, the dispute can go to your state's workers' compensation appeals board or committee. In independent bureau states, contact that bureau.

If your mod jumped and your renewal with it, it's worth getting other prices: the mod follows you to any insurer, but the rest of the price can differ from one insurer to the next. Compare workers' comp quotes, and have your worksheet ready, because any insurer will ask for it.

Frequently Asked Questions

What is a good experience modification rate? Anything below 1.00 is good, because it means your claims were better than average for your size and job classes and you get a discount on your workers' comp premium. Many project owners also want contractors below 1.0; the University of California, for example, won't prequalify a contractor without an EMR under 1.0 in each of the last three premium years.

How is an experience modification rate calculated? The rating bureau compares your actual losses over about three completed policy years with the expected losses for your payroll and job classes. Each claim is split at a state split point; the primary part counts in full and the excess part is weighted down. A ballast value keeps small employers' mods from swinging too far. The mod is adjusted actual losses divided by adjusted expected losses.

How long does a claim affect my EMR? Three annual mods. Under NCCI's plan, a claim in a policy that began on 1 January 2025 first counts in the 1 January 2027 mod and drops out after the 2029 mod. The current policy year is never used.

How do I find out my experience modification rate? Ask your insurance agent or insurer for your mod and its experience rating worksheet; your insurer gets both from NCCI or your state bureau. Someone you authorize in writing can also buy the worksheet from NCCI.

Does a new or small business have an EMR? Usually not. You're rated at 1.00 until your premium passes your state's eligibility threshold, for example $5,000 in Pennsylvania. New businesses with no claims history also get 1.00.

What is an EMR safety rating? It's the same experience modification rate. Contractors call it a safety rating because general contractors and public owners use it to screen bidders for safety, often with 1.0 as the cutoff.

Does the EMR apply to general liability or other insurance? No. The experience modification rate is part of workers' compensation and employer's liability rating. Other policies use their own pricing, though insurers will look at your claims history there too.

Related Terms

• Workers' Compensation Insurance – the coverage the mod applies to
• NCCI Class Code – the job classes that set your expected losses and base rate
• Premium Calculation – how payroll, class rates and the mod combine into a premium
• Premium Audit – the end-of-term check of the payroll your premium and mod are built on