What's a MOD and what does it mean to our customers?

MOD stands for Experience Modification Factor and it's a critical component in calculating Workers' Compensation premiums. While MOD calculations are complex, the underlying theory and purpose of the formula are straightforward. A company's actual Worker's Compensation claims (losses) are compared to expected claims by industry type. The formula incorporates factors that take into account company size, unexpected large losses and the difference between loss frequency and loss severity to achieve a balance between fairness and accountability.

The MOD represents a credit or a debit applied to the Workers' Compensation premium. If a claim history and claim payments are higher than the average, the MOD will be higher than the average (1.00) and a company's Worker's Compensation premiums will be higher than the average.

Conversely, if claim payments and claim history are lower than the average, the MOD and premium will be lower than the average.

L.L. Geans is proud of our MOD numbers. For 2015-2016, our number is .78. As you can see, that is well below the industry average of 1.00. Keeping our MOD number better than the industry average is important for several reasons:

• We want a safe work environment for our crews and our customers' employees
  
• We want our Workers' Compensation premium payments to be as low as possible. Low premiums reduce our overhead and keep our pricing competitive.
  
• The MOD is a safety benchmark. A number over 1.00 excludes many companies from bidding on projects.