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Handling your Workers Comp Experience Rating in the USA

February 5, 2014

Article By:  Jason Schmerer

 Work Injury Claim

In todays present economy jobs are few and far between, with employers having to  make do with what they have.  It is important that small businesses know that even though workers compensation may be one of their highest cost in regards to company insurance, employees are your greatest asset and you still need to protect them.

Loss prevention, safety and health  in my opinion, is one of the most important issues facing small businesses and general contractors when it comes to controlling costs, reducing premium and getting contracts.

 The idea is to be proactive and not reactive and keep the injuries from happening in the first place.

So how does the Workers Comp experience rating play into your profitability?

The experience modifier, also called experience rating or X-Mod, is a formula applied to the base premium and either rewards you or penalizes you based on your specific loss experience.  It is calculated based on frequency (how many) and severity (how much) of injuries in your workplace.  That is why I said earlier, in my opinion; loss prevention is the key to helping control costs and reducing your premium.

If you are a general contractor or are bidding on a government contract it is important to know about this experience modifier.  According to the Association of General Contractors (AGC) many general contractors do not know this number and are failing to win contacts because of their high experience ratings.

The AGC says it is a pervasive issue with general contractors especially in today’s economy.  If you do not know what your rating is ask your workers compensation insurance agent and they can help you with this.

Red Cross Warning

A normal experience rating is 1.0 if you are at 1.10 then you are paying 10% more in workers compensation then you should.  At 0.90 then you are below average and paying what you should.  Small businesses want to stay under or around the 1.0 number.

Loss frequency is still the biggest part of the experience modification calculation but severity is having a bigger impact now due to the rising costs of health care.  You should ask your Agent if they or your workers compensation carrier have a loss control representative that can come out and work with you on this.  If not, call a loss prevention business and they will also be able to help.

With our economy starting to improve most small businesses are doing more with less.  Like all asset protection, keeping your employees from getting injured maximizes productivity and reduces costs by preventing an unexpected rise in your X Mod and ultimately your workers comp premium.  If a contractor has a high frequency of injuries and a high experience rating it places them at a disadvantage with competitors that don’t.

Remember, you can always ask your insurance agent for your experience rating and ask your workers compensation insurance carrier for assistance putting in controls to help you get new contracts and grow your business.

About the Author:

Jason Schmerer is the owner of Loss Prevention Solutions Southeast, LLC in Jacksonville, Florida, USA.  His company provides profit/productivity solutions, workers compensation cost control, and OSHA compliance/safety program development throughout the Southeast United States.  He can be reached at (904) 253-0704 or email:

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