A single number that multiplies your workers compensation premium — and follows you for years.
Workers compensation · Updated September 2026
The experience modification factor compares your claims history to what would be expected for a business of your size in your classification. A mod of 1.0 means you are performing as expected. Below 1.0 earns a credit; above 1.0 applies a debit. It multiplies your premium directly, so a 1.25 mod means paying 25 percent more than the same business with an average record.
It is calculated from several years of data, usually excluding the most recent policy year, which is why the effect of a bad year shows up later and lingers after the problem is fixed.
The formula deliberately weights the number of claims more heavily than the size of any one claim. The reasoning is that a single catastrophic injury can happen to a careful employer, while a steady trickle of smaller claims indicates something about how the work is being done.
The practical consequence surprises people: five three-thousand-dollar claims usually damage a mod more than one fifteen-thousand-dollar claim. Small claims are not harmless.
A claim's value in the calculation includes the reserve the carrier has set aside for expected future costs, not just what has been paid so far. An open claim with a large reserve inflates your mod even if it eventually settles for far less.
Reviewing loss runs and pushing to close or correctly reserve stale claims before the mod is calculated is one of the few genuinely effective interventions available to an employer.
Many general contractors and public agencies will not let a subcontractor onto a site with a mod above a set threshold, commonly 1.0. At that point the mod stops being a pricing question and becomes a question of which work you are allowed to bid.
Report injuries promptly, since delayed reporting reliably increases claim cost. Build a return-to-work program with genuine light duty, which shortens the wage portion of a claim. Review loss runs quarterly for errors and stale reserves. Address the cause of repeat injuries rather than absorbing them. And verify the data used in your calculation — errors in payroll or claim values do occur and can be corrected.
Questions about your own situation? Call 417.623.8300 or send us your current policy. We are licensed in Missouri, Kansas and Oklahoma.
Send your current policy and we will check class codes, payroll, subcontractor exposure, your experience mod and claims history before we shop it.