Inputs
Multi-class payroll, adjustable rating factors, and claim options.
Example Data Table
Illustrative examples for planning scenarios.
| Scenario | Payroll | Expected losses | Actual losses | Estimated mod |
|---|---|---|---|---|
| Low claim activity | 650,000 | 5,400 | 3,200 | 0.92 |
| Typical year | 850,000 | 7,900 | 8,100 | 1.02 |
| One severe claim | 1,250,000 | 11,900 | 26,000 | 1.34 |
Professional Article
Experience Mod Purpose and Business Impact
The experience mod is a multiplier applied to manual premium to reflect loss performance. A mod of 0.90 reduces standard premium by about 10%, while 1.20 increases it by about 20%. This calculator estimates a planning mod using payroll, expected loss rates, and claim inputs.
Expected Losses from Payroll and ELR
Expected losses are calculated per class as (Payroll ÷ 100) × ELR. If Class 8810 payroll is 520,000 and ELR is 0.70, expected losses equal 3,640. Manual premium is computed as (Payroll ÷ 100) × Rate. Adding classes blends expected losses and premium across the policy.
Primary versus Excess Loss Split
Each claim is split at the selected split point. Losses up to the split point are treated as primary, and amounts above are excess. Expected losses are also separated using the expected primary ratio (EPR). This helps align expected and actual severity behavior when calculating the mod numerator and denominator.
Adjustments that Change Actual Loss Inputs
Optional settings modify incurred losses before the split. Medical-only discount reduces medical-only claims by a selected percentage. Claim deductibles and per-claim limits are applied next. Open-claim LDF and trend factors then scale losses to reflect development and inflation. A total loss limit can proportionally cap combined losses for sensitivity testing.
Interpreting Results, Scenarios, and Review
The estimator uses Mod = (AP + AE×W + B) ÷ (EP + EE×W + B), where W is the weighting value and B is ballast. Compare expected and actual totals on the chart, then test Scenario B to see how payroll growth or claim improvements affect mod and estimated standard premium. Export CSV for audit notes and share the PDF with stakeholders.
For best alignment, use bureau split points and weighting values when available, and enter claims by policy year using incurred (paid plus case). Review outliers, especially a single severe loss, because it can raise primary and excess totals differently. Validate inputs against loss runs before final budgeting decisions.
FAQs
1) Is this an official experience mod calculation?
No. It is a planning estimator. Official mods are issued by the rating bureau or state bureau using their rules, data sources, and audited loss experience for the rating period.
2) What is the split point and why does it matter?
The split point divides each claim into primary and excess portions. Primary losses influence the mod more strongly, so a higher split point typically increases the primary share of larger claims.
3) How should I choose the weighting value and ballast?
If you have bureau-provided values, use them. Otherwise, apply conservative assumptions and test sensitivity. Higher ballast and lower weighting usually dampen volatility from excess losses, especially for smaller accounts.
4) Should I enter paid losses or incurred losses?
Use incurred losses (paid plus case reserves) to reflect open-claim development. If you only have paid amounts, consider enabling an LDF for open claims, and document the assumption in your review.
5) What does the medical-only discount do?
When enabled, medical-only claims are reduced by the selected percentage before the split. This models plans where medical-only losses receive less weight than indemnity losses in experience rating.
6) How can I use Scenario B effectively?
Scenario B applies percentage changes to payroll and claims so you can compare outcomes quickly. Use it to test hiring growth, safety initiatives, deductible programs, or reserve development changes across renewals.
Formula Used
The estimator uses a primary/excess approach with stabilization:
- AP = Actual primary losses (per-claim up to split point).
- AE = Actual excess losses (above split point).
- EP = Expected primary losses (expected × EPR).
- EE = Expected excess losses (expected − expected primary).
- W = Weighting value applied to excess losses.
- B = Ballast added to both sides.
How to Use
- Add each payroll class with rate and expected loss rate.
- Enter split point, EPR, weighting value, and ballast.
- Add claims and mark medical-only, open, and cat flags.
- Enable claim options like deductible, limits, trend, or LDF.
- Calculate, then compare Scenario B for planning changes.