Workers Compensation Insurance Mod Rate


Experience rating compares a company's workers compensation losses with those of businesses engaged in similar types of work. The comparison results in an experience modification that may increase or decrease the company's workers compensation premium. Experience rating is mandatory for all eligible insureds. Businesses may not cancel, rewrite, or extend a workers compensation policy in an attempt to avoid experience rating or qualify for or avoid a change in their experience modifications. Eligibility is determined by the amount of qualifying premium that an insured generates. States vary in their premium thresholds, but they range from $2,250 to $5,500 in average annual premium. Specific information on the qualifying premium is available from the NCCI or other applicable independent rating organizations. The NCCI experience modification plan applies in forty-four jurisdictions (forty-three states and the District of Columbia). Independent experience rating plans apply in seven states: California, Delaware, Michigan, New Jersey, New York, Pennsylvania, and Texas. This discussion centers on the NCCI plan, which provides a framework for understanding experience rating. It is important, however, to check state regulations for differences.





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