Glossary · Insurance agency commissions
Experience modification rate (e-mod)
An experience modification rate (e-mod, or mod) is a factor applied to an employer’s workers’ compensation premium that compares its actual losses with the losses expected for a business of its size and class, so a mod above 1.00 raises premium and one below 1.00 lowers it.
What it means
NCCI’s Basics of Experience Rating presentation gives the simplified formula as actual losses divided by expected losses equals the experience modification, notes that actual losses “represent paid and reserved claims,” and that the rating is “mandatory for qualifying employers,” with qualification “based on premium, varies by state.” NCCI calculates mods in many states; some states have their own rating bureau.
The mod is usually recalculated each year and applied at the renewal of the workers’ compensation policy, though a revised mod can arrive mid-term and be applied by endorsement.
How it shows on a commission statement
The mod never appears as a commission line of its own. It shows up as a change in premium: a renewal that costs more or less than expiring with the same payroll, or a mid-term endorsement when a revised mod is applied back to the effective date. Commission follows that premium, so a mod revision can produce additional commission or a chargeback on a policy nobody touched. See our guide to commission on mid-term endorsements.
Example
- Premium before mod
- $20,000.00
- Mod at binding
- 1.10
- Premium written
- $22,000.00
- Revised mod, applied by endorsement
- 0.95
- Return premium
- −$3,000.00
- Commission chargeback at an invented 10%
- −$300.00
Common mistakes to check
- Reading a renewal premium drop as lost business when the mod fell.
- Treating a mod endorsement chargeback as an error without checking the revised mod.
- Forgetting that a mod change mid-term changes the producer’s split too.
Questions
What is an e-mod in workers’ comp?
A factor that compares an employer’s actual workers’ comp losses with the losses expected for its size and class. Above 1.00 raises premium, below 1.00 lowers it.
Does the experience mod affect agency commission?
Indirectly. Commission is a percentage of premium, and the mod changes premium, so a lower mod means less premium and less commission at the same rate.
Who calculates the experience mod?
NCCI in the states it serves; some states use their own rating bureau.
Sources
- NCCI, Basics of Experience Rating, presentation to NCOIL, December 11, 2020 (PDF). Retrieved October 14, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: workers’ compensation.