An “Experience Modifier” in the Workers’ Compensation system is a number assigned to each business that purchases Workers’ Compensation insurance.  It is used by  simply multiplying the Experience Modifier times each insurance company’s own Workers’ Compensation rates.  

This means that no matter which insurer you use the Experience Modifier is a part of the cost calculation of your Workers’ Compensation premium.  It is a formula that is recalculated each year telling the insurer how well your business has preformed compared to other similar businesses.  A 1.0 Mod is the theoretical “Average” account.  Any Modifier over 1.0 means that your businesses losses are higher than the “average” and any Modifier that is lower than 1.0 means that you are doing better than the average business.

The petrochemical plants on the Texas Gulf Coast, for example, only want “safe” companies with an Experience Modifier of 1.0 working on their premises.  That is why a “credit” modifier (less than 1.0) is so important.  Often if your Mod is above 1.0 they simply wont allow your company to work at their facility.