Experience modifier (original) (raw)

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In the insurance industry in the United States, an experience modifier or experience modification is an adjustment of an employer's premium for worker's compensation coverage based on the losses the insurer has experienced from that employer. An experience modifier of 1 would be applied for an employer that had demonstrated the actuarially expected performance. Poorer loss experience leads to a modifier greater than 1, and better experience to a modifier less than 1. The loss experience used in determining the modifier typically comprises three years but excluding the immediate past year. For instance, if a policy expired on January 1, 2018, the period reflected by the experience modifier would run from January 1, 2014 to January 1, 2017.