Commercial P&C

Understanding Your Workers' Comp E-Mod: How to Lower It Over Time

February 10, 2026  ·  4 min read  ·  By the Xpress Benefits Team
Worker in a safety vest at an industrial site

If you carry workers' compensation, one number has more influence on your premium than almost anything else you control: your experience modification rate, or e-mod. It also shows up on bid packages, so a high e-mod can cost you contracts as well as premium.

What the e-mod is

Your e-mod compares your business's actual workers' comp claims to the claims expected for a business of your size in your industry. An e-mod of 1.00 is average. Below 1.00 means your claims experience is better than expected, and your premium goes down. Above 1.00 means it's worse than expected, and your premium goes up.

The impact is direct. An e-mod of 0.85 reduces your premium by 15%. An e-mod of 1.25 increases it by 25%. On a $50,000 policy, the difference between those two numbers is $20,000 a year.

How it's calculated

In Texas, experience rating is calculated using the National Council on Compensation Insurance (NCCI) experience rating plan. Businesses become eligible once their workers' comp premium reaches a minimum threshold. The calculation generally uses three years of payroll and claims data, ending about a year before the e-mod takes effect. That means a claim from this year can affect your premium for the next three years.

Why frequency matters more than severity

The formula splits each claim into a primary portion and an excess portion. The primary portion, up to a split point set by NCCI, counts fully in your e-mod. The excess portion is heavily discounted.

The result is that several small claims usually hurt your e-mod more than one large claim with the same total cost. The formula treats frequent claims as a sign of an ongoing safety problem, while a single severe injury is treated as more random. This is why preventing the everyday cuts, strains, and slips matters so much.

📊
Ask for your e-mod worksheet.

Your rating worksheet shows the payroll, claims, and calculation behind your e-mod. Reviewing it with your broker each year can uncover errors, such as a closed claim still carrying a reserve or payroll assigned to the wrong class code.

Practical ways to lower your e-mod

  1. Invest in safety. Written safety programs, regular training, and accountability reduce how often injuries happen.
  2. Report claims immediately. Claims reported late tend to cost more, which increases their impact on your e-mod.
  3. Create a return-to-work program. Light-duty or modified work gets injured employees back sooner and reduces lost-time costs.
  4. Stay involved after a claim. Keep in touch with the injured employee and the adjuster, and ask for reserves to be reduced as a claim resolves.
  5. Classify payroll accurately. Payroll assigned to the wrong class code distorts the expected losses in your calculation.
  6. Review your worksheet every year. Errors happen, and correcting them can lower your e-mod immediately.

How long it takes to improve

Because the e-mod uses several years of data, improvements take time to show up. A bad year will affect your e-mod for about three years, and so will a good one. The businesses with the best e-mods treat safety and claims management as an ongoing discipline, not a one-time project.

The bottom line

Your e-mod isn't a fixed number assigned to you. It's the result of decisions you make every day about safety and claims. If you haven't looked at your e-mod worksheet in the last year, that's a good place to start.

Want a second look at your e-mod?

We'll review your e-mod worksheet, check it for errors, and help you build a plan to bring it down over time.

Get a Workers' Comp Review

This article is for general educational purposes only and does not constitute insurance advice. Experience rating eligibility, formulas, and split points are set by NCCI and are subject to change. The premium examples above are illustrative only.