What Is an Experience Modification Rate (EMR)?

An experience modification rate, or EMR, is a multiplier applied to your workers' comp premium after the base class-code rating is calculated. It's built by comparing your business's actual claims experience over a set look-back period, usually the three years before the most recent completed policy, against the expected losses for a business of your size and class codes. A mod of 1.00 means your experience is right at the expected baseline; a mod below 1.00 (say, 0.85) means your experience has been better than expected and reduces your premium; a mod above 1.00 (say, 1.20) means your experience has been worse than expected and increases it.

It helps to think of the mod as a comparison, not a grade in isolation. The formula is always measuring your business against other businesses doing similar work at a similar size, using industry-wide loss data as the yardstick. That's why a mod of 1.00 doesn't mean 'no claims' — it means your claims experience lined up with what's typical for your peers, which for many industries includes some baseline level of claims activity built into the expected-loss figure itself.

In most states, NCCI calculates the experience mod using a standardized formula; in independent-bureau states like New Jersey, New York, Pennsylvania, Delaware, California, Michigan, Massachusetts, and North Carolina, the state's own rating bureau does the calculation. The formula splits each claim into a 'primary' portion (the first slice of a loss, which is weighted more heavily because frequency of claims is considered more predictive of future losses than severity) and an 'excess' portion (the remainder of a large claim, weighted less heavily). This is why a single very large claim tends to move your mod less than a string of smaller claims of similar total cost — frequency counts more than severity in the formula.

The primary/excess split exists because rating bureaus have found that a business with several smaller claims is statistically more likely to have future losses than a business with one large, unusual claim and otherwise clean history. That's a useful thing to understand if you're trying to improve your mod: closing out minor incidents safely and preventing repeat injuries usually helps more than worrying about a single catastrophic claim years ago, which the formula already discounts through excess-loss weighting.

There's no single number, but the useful reference point is the baseline itself: 1.00 represents the industry-average experience for your class codes and size. A mod meaningfully below 1.00 signals a safety record better than peers; a mod meaningfully above 1.00 signals the opposite and can also affect which carriers are willing to quote you, since some carriers set underwriting appetite limits around mod thresholds.

What counts as 'meaningfully' above or below 1.00 varies by industry and by carrier appetite, so a mod that would be considered strong in a higher-risk trade might be unremarkable in a lower-risk office environment where mods cluster more tightly around the baseline to begin with. Comparing your own mod to your specific industry's typical range, rather than to a generic number, gives a more useful read on where you actually stand.

A brand-new business has no claims history to build a mod from, so it's typically assigned a mod of 1.00 by default until it accumulates enough experience — usually a minimum premium size and at least one full experience period — to be individually rated. See our guide to workers' comp for new businesses for what carriers look at instead of history when you're just starting out.

A similar rule applies to businesses that stay small: below a certain premium size, a business may fall under the threshold where the rating bureau calculates an individual mod at all, and instead carries the neutral 1.00 indefinitely regardless of claims activity, since the statistical sample is considered too small to be reliable. This threshold varies by state and rating bureau, so a small business shouldn't assume either outcome without checking.

The mod responds to your actual claims experience over multiple years, so there's no single fast fix, but a few things move the needle over time:

NCCI or your state's rating bureau issues a worksheet each year showing exactly how your mod was calculated: the claims included, the payroll and expected-loss figures used, and the primary and excess splits applied to each claim. Reviewing this worksheet against your own records, rather than only looking at the final number, is the best way to catch an error — a claim that should have closed but is still showing an open reserve, a payroll figure that doesn't match your actual audit results, or a claim that belongs to a different location or entity entirely. Bureaus generally allow a formal correction request within a specific window, so catching a mistake early matters.

Because the mod multiplies your base premium, even a modest change can meaningfully affect what you're quoted, and different carriers weigh mod history differently in their underwriting appetite. Comparing multiple carriers matters more, not less, when your mod is a factor. Get Multiple Quotes within minutes to see how your specific experience is treated across the carriers we have access to.