how an experience rating is used
an experience modifier is the adjustment of annual premium based on previous loss experience 1 for instance three years of loss experience are typically used to determine the experience modifier for a workers compensation policy an experience modifier is calculated every year a modifier may be less than greater than or equal to one a modifier of one means that your loss experience is average for your industry group that is your loss history is no better or worse than other businesses similar to yours in such a case your premium will likely remain unchanged if your modifier is greater than one your loss experience is worse than average for your industry group a modifier that is greater than one will increase your premium for the upcoming policy period likewise a modifier of less than one signifies a loss history that is better than average a modifier of less than one will achieve a premium reduction 