Short answer: your experience modification rate, or “mod,” is a multiplier NCCI calculates by comparing your actual workers’ comp losses over three past policy years with the losses expected for a business with your payroll in your class codes. A 1.00 mod is average. A 0.85 mod takes 15% off your premium, and a 1.25 mod adds 25%. Because the first part of every claim counts in full and the rest is discounted, several small claims usually raise a mod more than one large claim of the same total cost.
For a contractor bidding commercial work or a manufacturer with a six-figure comp premium, the mod is often the single largest number they can influence on the policy. It also follows a claim for three years, so a decision made the week of an injury shows up in renewals long after the claim closes. This guide explains how Illinois mods are calculated, which years count, how to read the worksheet, and where errors hide. The calculator further down shows what one claim does to your own premium.
What the Experience Mod Is
Illinois is one of the states where the National Council on Compensation Insurance (NCCI) runs the experience rating plan. NCCI collects payroll and claim data that insurers report on every policy, calculates each eligible employer’s mod, and publishes it. Your insurer does not set the mod; it applies the mod to your premium.
Not every business has one. A mod applies only when your premium is above an eligibility amount that NCCI sets for Illinois and updates each year. Below that amount, or for a new business without enough history, the mod is 1.00, and individual claims do not change it. As a business grows past the threshold, its first mod arrives built from the history it already has.
The mod multiplies your manual premium, which is payroll divided by 100 times the rate for each class code. Other adjustments, such as schedule credits, premium discounts for larger accounts and the state surcharge, are applied around it. A mod of 1.20 on $100,000 of manual premium adds $20,000 a year before anything else.
Which Years Count
The experience period is not “the last three years.” Under NCCI’s plan, a policy’s experience is used when the policy started at least 21 months and no more than 57 months before the mod’s rating effective date, which is normally your policy anniversary. That usually means three complete policy years, and it skips the policy you are in now.
| Mod effective January 1 of | Policies used (January renewals) | Not used |
|---|---|---|
| 2026 | 2022, 2023 and 2024 | 2025, the policy that was running when the mod was calculated |
| 2027 | 2023, 2024 and 2025 | 2026 |
| 2028 | 2024, 2025 and 2026 | 2027 |
Read across the table and the three-year tail is plain: a claim on the 2024 policy sits in the 2026, 2027 and 2028 mods, then drops off. NCCI generally calculates the mod 60 to 90 days before the rating date, so the 2027 mod for a January renewal is usually out in October or November 2026.
Claim values are captured on a schedule. Insurers report each policy’s claims to NCCI at 18 months after the policy started, again at 30 months and again at 42 months, and the mod uses the latest report. A reserve that drops after a valuation date does not change the mod until the next report. That timing matters when you are working to close claims, and it comes up again below.
How the Mod Is Calculated
Every claim is divided into two parts at a dollar amount called the split point. The part up to the split point is the primary loss, and it counts in full. The part above it is the excess loss, and only a fraction of it counts. Under a change NCCI began rolling out in 2024, each state, Illinois included, now has its own split point, set so that about 40% of expected losses fall below it and indexes each year; the figure for your rating is printed near the top of your worksheet. For reference, the split point was a single countrywide $18,500 before that change.
Your expected losses are built the same way. For each class code, NCCI multiplies your payroll by an expected loss rate for that class, and a D-ratio splits the result into expected primary and expected excess. Then the formula compares the two:
Mod = (Ap + W × Ae + (1 − W) × Ee + B) ÷ (E + B)
| Term | What it means |
|---|---|
| Ap | Actual primary losses: your claims up to the split point |
| Ae | Actual excess losses: the part of each claim above the split point |
| E | Total expected losses for your payroll and class codes |
| Ee | Expected excess losses |
| W | Weighting value: how much of your excess losses count. It is small for smaller employers and rises toward 1 for the largest |
| B | Ballast value: a stabilizing amount that keeps one bad year from swinging a smaller employer’s mod too far |
NCCI’s own training guide, The ABCs of Experience Rating, works an example: expected losses of $197,071, actual primary losses of $88,100, actual excess losses of $75,640, a weighting value of 0.16 and a ballast of $45,900. The adjusted actual losses come to $243,120 and the adjusted expected losses to $242,971, for a mod of 1.00. That employer had nearly $164,000 of claims and still landed on average, because only 16% of its excess losses counted and its primary losses were close to what was expected.
Why Several Small Claims Hurt More Than One Large One
Take an employer with about $60,000 of expected losses, a ballast of $46,000, a weighting value of 0.10 and a $20,000 split point. A single $40,000 lost-time claim adds $20,000 of primary loss and $20,000 of excess loss, of which 10% counts. The same $40,000 spread across five $8,000 claims is all primary, and all of it counts. In this example the single claim adds about 0.21 to the mod and the five small claims add about 0.38, nearly twice as much for the same dollars.
That is by design. The plan treats claim frequency as the better predictor of future losses, since a serious injury can happen to a careful employer once, while a steady stream of smaller injuries points to conditions on the job. For the business, it means the sprains, strains and cuts that never make the news are what move the mod, and they are also the injuries most within reach of training, housekeeping and supervision.
Medical-only claims
A claim where the employee needed treatment but lost no wage benefits is a medical-only claim. Under NCCI’s experience rating adjustment, which applies in nearly every NCCI state, a medical-only claim enters the mod at 30% of its cost. A $30,000 medical-only claim at an $18,500 split point counts as $5,550 of primary loss and $3,450 of excess, according to NCCI’s guide. Your worksheet shows whether the reduction was applied to each claim.
The reduction is there so employers report small injuries instead of paying them out of pocket to protect the mod. Paying a claim yourself and never reporting it has other risks: the injury can turn into a larger claim later, reported late, with fewer options for managing it.
What One Claim Costs You
Enter your premium and current mod, or the expected losses, weighting value, ballast and split point from your worksheet, and pick a claim. The result shows the change in your mod, the extra premium over the three years the claim counts, what the same dollars would do as five smaller claims, and how much in sales it takes to pay for it.
The sales figure is the one that tends to land with owners. At a 5% profit margin, every $10,000 of extra premium takes $200,000 of new revenue to pay for. A claim that adds $20,000 a year for three years has to be covered by more than a million dollars of sales.
How to Lower Your Mod
Everything that lowers a mod works through one of two channels: fewer claims, or smaller values on the claims you have when NCCI takes its snapshots.
- Go after frequency. Track near misses and first-aid cases, fix the conditions behind them, and make it normal to report a hazard. Since small claims carry the most weight, cutting their number is the most direct lever.
- Report injuries the day they happen. Late-reported claims tend to cost more, and a medical-only claim that becomes a lost-time claim through delay loses its 70% reduction.
- Run a return-to-work program. Light or modified duty keeps wage benefits from starting or keeps them short, which can keep a claim medical-only and lowers its total either way.
- Review open claims before each valuation date. Claims are captured at 18, 30 and 42 months after each policy starts. Ask your insurer’s adjuster, well before those dates, whether reserves on open claims still match the facts and which claims can be closed.
- Pursue subrogation. When a third party caused the injury, such as another driver or a defective machine, the insurer’s recovery reduces the loss, and NCCI accepts a correction report for it.
- Report ownership changes. A merger, sale or new entity has to be reported to NCCI within 90 days on form ERM-14. Combining or transferring experience correctly can help or hurt, and failing to report can be treated as evasion.
How to Read Your Worksheet and Catch Errors
The worksheet lists each policy in the experience period, payroll and expected losses by class code, and each claim with its type and value. Errors are more common than owners expect, and an error on the worksheet repeats for three years. Check these each time a new mod comes out:
- Payroll by class and year matches your final audits, not the original estimates.
- Class codes match what your employees did that year.
- Every claim is yours, appears once, and falls in the right policy year.
- Claims that never paid wage benefits are coded medical-only and show the 70% reduction.
- Closed claims show their closed values, and claims denied as not compensable are gone.
- Subrogation recoveries reduce the claims they belong to.
- Related companies are combined, or kept apart, the way ownership requires.
If something is wrong, start with the insurer that reported the data, since NCCI corrects a mod when the reporting carrier files a correction. NCCI also runs a dispute resolution process for rating questions. In Illinois, 215 ILCS 5/462 lets anyone aggrieved by how a rating system was applied ask for a review in writing and, if it is denied or ignored for 30 days, appeal to the Director of Insurance. Under 215 ILCS 5/462b, insurers must refund premium charged because rating factors were applied incorrectly.
When a correction lowers a mod, the lower mod generally applies back to the start of the policy. An increase found within 90 days of the policy’s start also applies back to the start; one found later generally applies from the date of the change forward.
EMR, TRIR and DART: What Bid Forms Ask For
Owners, general contractors and facility managers often ask for three safety numbers on prequalification forms, and many set a maximum mod, frequently 1.00. The other two come from your OSHA records, not your insurance:
| Measure | Source | How it is calculated |
|---|---|---|
| EMR (experience mod) | NCCI, from insurer-reported claims and payroll | The formula above, three policy years |
| TRIR (total recordable incident rate) | Your OSHA injury records | Recordable cases × 200,000 ÷ total hours worked |
| DART (days away, restricted or transferred) | Your OSHA injury records | DART cases × 200,000 ÷ total hours worked |
The 200,000 represents 100 full-time employees working a year, so the rates compare across company sizes. TRIR and DART move the year an injury happens; the mod moves a year or more later and stays for three. A company can have a clean TRIR this year and a high mod from injuries two years ago, and bid forms that ask for both are seeing two different time windows.
Common Misunderstandings
- “Last year’s claims are in my new mod.” Not yet. The policy you were on when the mod was calculated is not in the experience period.
- “Big claims drive the mod.” Mostly the opposite. The primary part of every claim counts in full; the excess part is weighted down.
- “Closing a claim for less fixes the mod right away.” A lower reserve reaches the mod at the next valuation report, not immediately. Subrogation recoveries and errors are handled as corrections.
- “A new company name starts a new mod.” Generally not. Experience follows the operation to new ownership, and changes must be reported.
- “My insurer raised my mod.” NCCI calculates it from data insurers report. The insurer applies it, and the insurer is where corrections start.
Frequently Asked Questions
What is a good experience modification rate?
Anything below 1.00 means your losses have been better than expected for a business your size in your classes, and it lowers your premium by the same percentage. Many owners and general contractors set 1.00 as the maximum on prequalification forms.
How long does a claim affect my experience mod?
Three mods. A claim enters the mod about two years after the policy it happened on started, stays for three annual ratings, and then drops off.
Who calculates the experience mod in Illinois?
The National Council on Compensation Insurance (NCCI), using payroll and claim data that insurers report. Your insurer applies the mod to your premium.
Do medical-only claims count in the mod?
Yes, at a reduced amount. Under NCCI’s experience rating adjustment, a medical-only claim enters the calculation at 30% of its cost. Your worksheet shows whether the reduction was applied.
Why did my mod go up when I had no new claims?
Usually because a good year dropped out of the three-year window, reserves on older claims went up at a later valuation, or your payroll or class mix changed your expected losses. The new worksheet shows which.
Does every business have an experience mod?
No. Only businesses whose premium is above the eligibility amount NCCI sets for Illinois each year get one. Smaller businesses and new businesses are rated at 1.00.
Can I dispute my experience mod?
Yes. Start with the insurer that reported the data, since NCCI corrects a mod when that insurer files a correction. NCCI also has a dispute resolution process, and Illinois law lets you request a written review and then appeal to the Director of Insurance.
This article provides general educational information about NCCI’s experience rating plan as it applies in Illinois. It is not a rating determination, and examples use illustrative values. Your worksheet, NCCI’s current Illinois rating values and your policy decide your mod and premium.
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