Octomod - An Experience MOD Reduction Company

An experience mod is a factor that is multiplied by the manual premium on a workers compensation policy to adjust the premium either upward or downward based on a 3 year historical loss history.

In its most simple form, the formula to determine an experience mod is below:

Experience Mod = Your Company’s Actual Losses

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Average Company’s Losses

A company can have any of the following mods:

Debit Mod: Which surcharges an insured due to loss history that is less favorable than an average company’s loss history within the same type of industry and the same payroll.

Example: Manual Premium $300,000
Debit Mod: 1.40
Modified Premium: $420,000

Credit Mod: Which credits an insured for loss history that is more favorable than an average company’s loss history within the same type of industry and the same payroll. Just because you have a credit mod of .90, doesn’t mean that your experience mod does not need management. We have seen mods as low as a .60, which would save an additional 30% on your standard premium.

Example: Manual Premium $300,000
Credit Mod: .90
Modified Premium: $270,000

Neutral Mod: A mod of 1.00. Don’t be confused in thinking that a mod of 1.00 is considered "good". A mod of 1.00 is "average".

There are many complex factors and ever changing variables that determine the calculation of an experience mod. These variables include:

Proper Rating Classifications
Payroll Estimates vs Audits
Actual Primary Losses
Actual Excess Losses
Expected Primary Losses
Expected Excess Losses
Claim Reserving Practices
Determination of Non-Compensable Claims
Complying with Unit Stat Filing Dates
Subrogation Potential
Business Ownership Control
Interstate vs Intrastate Mods (multistate operations)
Aggravated Inequity
Effect of Deductibles
Effect of Combining Entities
Preliminary Mods
Contingent Mods
Effects of PEO/Employee Leasing

Since the management of an experience mod has so many variables and is so time consuming, insurance agencies do not have the expertise, the proprietary tools, nor the manpower to properly manage and permanently reduce an experience mod. OCTOMOD was developed to fill this critical need that every business owner has regarding the management of their experience mod ... and ultimately reduce their workers compensation insurance premiums.