Experience mod evasion, also called experience modification evasion or experience modifier evasion, is a workers' compensation insurance term for a type of premium fraud that can be committed by a business to pay a lower premium.
The experience mod is calculated by rating bureaus such as the National Council on Compensation Insurance (NCCI) or an individual state's rating bureau. These organizations set the rates based on industry hazard and loss data. An individual business’s experience mod is then adjusted from that rate based on its own previous losses. Lower experience mod ratings mean the business has a better than average loss history. The industry average is set at 1.0, so a business with a 0.8 experience mod means it may pay lower than average workers’ compensation insurance premiums than similarly sized and classified organizations. A business with a 1.3 experience mod has losses that are above the average, and this business may pay more in workers’ compensation insurance premium than others similar in size and classification.
Fraudsters trying to commit experience mod evasion are attempting to keep their rate from going up. Experience mod evasion may be committed a few ways. One way is to not report a workplace injury to the insurer, instead trying to settle it off the books with the injured worker. Another way is when a company with a record of workers' compensation claims chooses not to report those claims to their carrier. Sometimes a business will even close down and then re-open as an entirely new entity in an attempt to hide a history of claims.
Instead of misrepresenting your workers' compensation experience, consult with an experienced safety expert in your field to help create a safer workplace. Some carriers, such as EMPLOYERS®
, help their policyholders establish workplace safety programs which can help to lower your experience mod and save you money.