EXPERIENCE MOD: WHAT IT COSTS AND WHAT IT BLOCKS.
A mod of 1.00 is average. A mod below 1.00 earns a credit and a mod above 1.00 adds a surcharge, so a 1.25 pays 25 percent more than a 1.00 on the same payroll and the same class codes. The mod is built from three policy years, not counting the most recent one, using the contractor's payroll by class code and its claims. Many general contractors and owners also use the mod to decide who can bid, and 1.0 is a common limit. A high mod costs money twice: in the premium, and in the work the contractor cannot bid.
The mod turns a few claims into a cost on every job for the next three years. It is set by a rating bureau and not by the insurer, and it can be wrong. This page explains how it is built, what it does to the premium and to prequalification, and what changes it.
WHAT IT MEANS.
The experience modification rate, also called the EMR or experience mod, is a multiplier applied to a contractor's workers compensation premium that compares its losses over three years to the losses expected for similar employers.
Most states use NCCI to calculate the mod. A few states, including California, New York and Pennsylvania, use their own rating bureau with their own rules. This page describes the general method, and the worksheet from your own bureau is the number that applies to you.
HOW THE MOD IS BUILT.
Three years of policy data, not the latest year
The mod uses three consecutive policy years that end one year before the effective date. A mod effective January 1, 2027 uses policy years 2023, 2024 and 2025. Expected losses come from the contractor's payroll by class code multiplied by an expected loss rate from the bureau. Actual losses are compared to that figure.
Primary and excess losses
Each loss is split at a dollar amount called the split point. Losses up to it are primary and count at full weight. Losses above it are excess and count at reduced weight. NCCI moved from one national split point to state-specific split points in 2024. Because primary losses count fully, several small claims can raise the mod more than one large claim of the same total cost.
The mod times the premium
The premium is the payroll divided by 100, times the manual rate for the class code, times the mod. Payroll in each class code is multiplied separately. A contractor with two class codes has two manual premiums and one mod applied to both.
The mod and the work you can bid
A mod of 1.0 is the most common limit for subcontractor prequalification. One large mechanical contractor's published safe work practice says the subcontractors it hires should have a mod of 1.0 or less. A national laboratory's construction subcontractor requirements ask for three years of mods from the carrier and a written explanation of any mod above 1.0. Public work often sets its own limit in the bid documents, so those are read before bidding.
Why one claim stays three years
A policy year's losses are used in three consecutive mods. A serious claim in one year raises the mod at three renewals, and then it leaves the calculation. A mod can also be wrong: a wrong class code, payroll recorded in the wrong class, a claim kept open longer than needed, or a recovery that was never credited. Each one is a reason to read the worksheet every year.
WHAT IT LOOKS LIKE IN DOLLARS.
Take $2M of payroll in a class with a manual rate of $8 per $100 of payroll. The manual premium is $160,000. At a mod of 0.85 the premium is $136,000. At 1.00 it is $160,000. At 1.25 it is $200,000. The difference between 0.85 and 1.25 is $64,000 a year.
On $6M of revenue, $64,000 is 1.07 percent of revenue. On a 7 percent net margin that is about 15 percent of the profit.
A mod of 1.25 rather than 0.85 for three renewals costs $192,000 on this payroll. A claim does not have to be large to start that. A series of small claims counts at full weight in the primary losses.
WHAT WE CHANGE.
SPM asks for the mod worksheet when it is issued and checks the payroll, the class codes and the claims against the books. Errors found in the first month can be raised with the broker and the carrier before the renewal.
Workers comp is part of the burden on every hour of labor. When the mod changes, the burden rate changes and every open bid is repriced with it. See the labor burden page.
Each claim is recorded against the job where it happened, with its cost and its status. Reporting an injury the same day and a return to work plan are the two steps the contractor controls.
The carrier letter showing three years of mods, the OSHA logs and the financial statements are collected before a bid needs them. The financial part of a prequalification is covered on the prequalification page.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
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