For years, contractors have understood the importance of a low workers’ compensation experience modification rate—better known as the MOD. A strong MOD tells a clear story: a contractor with solid safety practices, fewer incidents, and well‑controlled workers’ compensation costs. It also sends a powerful message to customers who increasingly view MOD as a proxy for reliability and professionalism.

But today, even excellent contractors are discovering something frustrating: maintaining a MOD below 1.0 is getting harder—mathematically harder—regardless of how safe your operation truly is. This trend affects both NCCI and independent bureau states, although the formulas and mechanics differ by jurisdiction. All examples provided here are illustrative only, not universal. Each jurisdiction applies its own rating formula.

What Changed? The Split Point—And Why It Matters

In workers’ compensation experience rating, each claim is divided into two components:
– Primary losses: the portion of a claim up to the split point, weighted heavily
– Excess losses: the remainder of the claim, weighted much less

Because primary losses drive the MOD more than anything else, the size of the split point has an enormous effect on the final rating.
Over the past decade, many states—including Illinois—have significantly increased their split points to reflect rising claim severity. These adjustments vary by jurisdiction.

Illustrative Example: A $40,000 Claim (Not State‑Specific)

2015 (Typical Split Point ≈ $15,000)
– Primary: $15,000
– Excess: $25,000

2026 (Typical Split Point ≈ $28,000)
– Primary: $28,000
– Excess: $12,000

This example demonstrates how a higher split point pushes more of the claim into the fully weighted primary category—even though the claim itself has not changed.

Why Employers Are Feeling the Squeeze

The mathematics behind today’s rating systems mean:
– Midsized claims now impact the MOD significantly more
– Fewer losses fall into discounted excess categories
– Maintaining a sub‑1.0 MOD requires even cleaner loss experience than before
In short: today’s MOD reflects changes in rating structure as much as your actual safety practices.

Sharing This Information with Your Insurance Agent—and Customers

Your insurance agent should continuously advocate for you, document safety efforts, analyze losses, and ensure your rating is calculated accurately. This trend provides important context for underwriters and may help customers understand that a slight increase in MOD is not necessarily tied to weaker safety performance.

Bottom Line

A low MOD still matters—and strong safety programs remain critical. But the current rating environment means even top‑tier contractors may see higher MODs, not due to declining safety, but because the formula itself has changed. Understanding these changes—and communicating them effectively—is now essential to protecting your reputation and maintaining competitive positioning.

Note: Please refer to your own jurisdiction, to review its formula and split-point structure as this varies state-by-state.