How Low Can Your Experience Mod Really Go?

Many employers look at their experience modification factor (mod) and ask a simple question:

“How much lower can this realistically go?”

It’s a smart question — and one most companies never properly answer.

The truth is, your mod has two components:

1. A minimum mod (the lowest possible number your company could achieve), and

2. A controllable mod (the portion you can influence through better injury management).

Understanding the difference between the two is one of the most powerful financial tools available in workers’ compensation.

First: There Is No Such Thing as a Zero Mod

No company can ever have a 0.00 mod.

Why?

Because every industry carries inherent risk. Even the safest organization in the world still operates in an environment where injuries are statistically possible.

That’s why the mod formula includes stabilizing factors — often referred to as ballast — which prevent extreme swings and recognize that some level of loss is expected.

So instead of asking, “Can we get to zero?”
The better question is:

“What is our minimum possible mod?”

How to Calculate Your Minimum Mod

There’s a simple shortcut formula:

Minimum Mod = Stabilizing Value ÷ Expected Total Losses

You can find both numbers directly on your experience mod worksheet.

This calculation tells you the theoretical floor — the absolute lowest mod you could achieve if you had zero actual losses during the experience period.

For example:

• Stabilizing Value: $300,000

• Expected Total Losses: $1,000,000

Minimum Mod = 0.30

That means even with perfect performance, your mod cannot drop below 0.30.

Now Let’s Talk About Controllable Mod

Suppose your current mod is 0.85.

Your minimum mod is 0.30.

That difference — 0.55 — is your controllable mod opportunity.

This is where leadership decisions matter.

This is where safety systems, return-to-work programs, lag time reduction, and medical management make a financial impact.

This is not theoretical. It’s measurable.

Why This Matters Financially

Your mod is a multiplier.

If your manual premium is $2,000,000:

• At a 0.85 mod → Premium = $1,700,000

• At a 0.30 mod → Premium = $600,000

That’s a potential savings of $1.1 million.

Now realistically, you may never reach your minimum mod. But understanding your controllable gap allows you to:

• Set realistic goals

• Quantify opportunity

• Show leadership the financial upside

Instead of saying, “We want to improve safety,”
You can say:

“We have a $900,000 controllable opportunity over the next three years.”

That changes the conversation.

Why Most Companies Never Do This

Most organizations:

• Look at their mod once per year

• Accept the number

• Move on

They don’t dissect the worksheet.

They don’t calculate the minimum.

They don’t quantify the controllable opportunity.

As a result, they leave strategy on the table.

What Drives the Controllable Portion?

The controllable mod is primarily influenced by:

• Claim frequency (primary losses)

• Timely reporting (lag time)

• Return-to-work performance

• Medical-only vs. lost-time classification

• Proper reserving

These are operational decisions — not insurance decisions.

And that’s what makes the controllable mod powerful.

It puts cost control back in the employer’s hands.

Strategic Use: Aligning Leadership

When presenting to executives, the minimum vs. controllable mod framework provides clarity.

Instead of vague safety discussions, you can:

1. Show the minimum mod

2. Show the current mod

3. Show the financial gap

4. Outline the steps to close it

This ties injury management directly to financial performance.

And once leadership sees the controllable opportunity in real dollars, investment in safety and claims strategy becomes easier to justify.

Final Thought

Your experience mod is not just a score — it’s a range.

The bottom of that range is your minimum mod.

The space above it is your opportunity.

The companies that win in workers’ compensation are the ones that:

• Know their minimum

• Measure their controllable

• Execute intentionally to close the gap

If you haven’t calculated your minimum mod yet, that’s your next move.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

©2025 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.