Short answer
An experience mod (also called EMR or mod) is a factor that compares your actual workers comp losses to the losses expected for a company with your payroll in your class codes. A 1.00 is average. Below 1.00 is a credit that lowers your premium, and above 1.00 is a debit that raises it. In Texas, mods effective on or after July 1, 2015 are calculated under NCCI’s Experience Rating Plan with Texas exceptions.
- The mod generally uses three years of history and leaves out your current policy year. It weights how often you have claims more heavily than how big they are.
- Operators and prequalification platforms ask for it because it is a standardized, third-party number about your loss history.
What the number means
NCCI describes experience rating as a way to compare "the experience of individual employers with the average employer in the same classification." The result is a factor applied to your premium. NCCI's own example: on $100,000 of premium, a 0.75 mod produces $75,000, a 1.00 leaves it at $100,000, and a 1.25 produces $125,000.
Experience rating is mandatory once you qualify. Each state sets a premium eligibility threshold, and an employer that meets it gets a mod whether it wants one or not. NCCI says an employer gets a unity (1.00) factor if it does not meet eligibility, is a new business with no data, or when data could not be provided because of an ownership change.
In Texas, TDI adopted the NCCI Experience Rating Plan Manual with Texas exceptions for modifications effective on or after July 1, 2015. Before that, Texas used its own plan.
Which years count
The mod is built from your payroll and claims over an experience period, usually three years. NCCI explains that a policy is included if its effective date is between 21 and 57 months before the rating effective date. In NCCI's example, a mod effective January 1, 2026 uses policies that started between April 1, 2021 and April 1, 2024.
Two practical points follow:
- Your current policy year is not in the mod. The mod is calculated during the current term, generally 60 to 90 days before it takes effect, and insurers do not report a policy's data until 18 months after it starts.
- A bad year stays with you for about three renewals. It enters the calculation once it is old enough to be reported, then drops off when it ages out.
The data comes from unit statistical reports your insurer files with NCCI. Claims are entered at their incurred value, which includes reserves on open claims, so how a claim is reserved can move your mod before the claim ever closes.
Why claim count matters more than claim size
This is the part that surprises most owners. NCCI's plan "gives greater weight to accident frequency than to accident severity."
It does this by splitting each claim. The first part of every claim, up to a state-approved split point, is primary loss. Everything above it is excess loss. Primary losses carry more weight in the formula. NCCI's illustration: ten $5,000 claims produce far more primary loss than one $50,000 claim, so the employer with ten small claims "receives a much higher mod" even though total losses are the same. Very large claims are also capped per claim by a state accident limitation.
Medical-only claims count less. Under the Experience Rating Adjustment in most states, only 30% of a medical-only claim enters the calculation.
The weights also depend on size. NCCI notes that a larger employer's mod is more influenced by its own experience, while a small employer's mod is tempered so that one bad claim does not swing it too far.
| Employer | Claims | Effect on mod |
|---|---|---|
| A | One claim totaling $50,000 | Only the portion up to the split point counts as primary loss |
| B | Ten claims of $5,000 each | Every claim is mostly or entirely primary loss, so the mod is much higher |
How it shows up in your MSA and prequalification
Operators and prequalification platforms commonly ask for your mod alongside your TRIR, often for several years. Some set a ceiling in their contractor requirements. A mod above that ceiling can mean extra review or a request for a safety plan, depending on the operator.
What to keep on hand:
- Your current mod worksheet and the prior two or three. Your agent or insurer can get these.
- An explanation for any year that pushed the mod up: what happened, what changed afterward.
- Your loss runs, which should match what is on the worksheet. See what a loss run is.
If you bought a company or changed ownership, ask how the ownership change affects the mod before you assume it resets. NCCI lists ownership changes as one situation that can result in a unity mod when data could not be provided, but the outcome depends on the facts.
Check the worksheet, not just the number
Wrong payroll, a claim charged to the wrong policy, or a reserve that was never reduced after a claim closed can all inflate a mod. If something on the worksheet looks wrong, raise it with your insurer early, before the mod is applied at renewal.
Common questions
Who calculates my mod in Texas?
Mods effective on or after July 1, 2015 are calculated under the NCCI Experience Rating Plan Manual with Texas exceptions, as adopted by TDI. Your insurer applies it to your policy.
Does changing insurers reset my mod?
No. The mod follows your payroll and loss experience, not your insurer. Data from prior policies stays in the calculation for the experience period.
Should I pay small claims myself to protect my mod?
NCCI notes that the Experience Rating Adjustment, which counts only 30% of medical-only claims, was designed to reduce the incentive to pay medical-only claims without reporting them. Report injuries as your policy requires; unreported claims can create bigger problems than a mod increase.
Why is my mod 1.00 even though I have had no claims?
NCCI assigns a unity mod if you do not meet the state premium eligibility threshold or do not have enough data, which is common for new and small companies.
Sources
- NCCI: ABCs of Experience Rating. Comparison to average employer in the class; frequency over severity; primary and excess split; 30% medical-only adjustment; experience period of policies 21 to 57 months before the rating date; unity mod situations; premium example.
- TDI Bulletin B-0024-14: Adoption of the NCCI Experience Rating Plan Manual with Texas exceptions. NCCI ER Plan with Texas exceptions applies to mods effective on or after July 1, 2015.
- Texas Department of Insurance: How workers compensation rates are computed. Experience modifier applied to premium based on past loss history.
- IRMI glossary: Incurred Losses. Incurred losses include paid claims plus loss reserves.
This page explains insurance, not law. Have your attorney review indemnity and contract language; our job is making the insurance match it.
Keep reading
Questions
What is TRIR, and why do operators ask for it?
Questions
What is a loss run, and how do I get one in Texas?
Questions
Does a safety program actually lower my oilfield insurance premiums?
Questions
How much does oilfield contractor insurance cost?
Contract requirements
ISNetworld rejected my certificate of insurance. What do I fix?