What is the average eMod factor typically expressed as?

What is the average eMod factor typically expressed as?

• A. 1.5
• B. 2.0
• C. 1.0
• D. 0.75

Answer: (C)

The average experience modification factor (eMod) is typically expressed as 1.0. The eMod is utilized in workers' compensation insurance to calculate a company's insurance premium based on its claim history compared to the industry average. An eMod of 1.0 indicates that a company's claim history is average when compared to other businesses in the same classification. If a company's eMod is above 1.0, it suggests that the business has a higher claim history than average, which may lead to higher premiums. Conversely, an eMod below 1.0 indicates a better-than-average claims history, possibly resulting in lower premiums. Understanding that the eMod reflects the relative risk of a business, the value of 1.0 serves as the benchmark against which individual businesses are measured, making this a critical figure for both risk assessment and cost calculations in workers' compensation insurance.

The average experience modification factor (eMod) is typically expressed as 1.0. The eMod is utilized in workers' compensation insurance to calculate a company's insurance premium based on its claim history compared to the industry average.

An eMod of 1.0 indicates that a company's claim history is average when compared to other businesses in the same classification. If a company's eMod is above 1.0, it suggests that the business has a higher claim history than average, which may lead to higher premiums. Conversely, an eMod below 1.0 indicates a better-than-average claims history, possibly resulting in lower premiums.

Understanding that the eMod reflects the relative risk of a business, the value of 1.0 serves as the benchmark against which individual businesses are measured, making this a critical figure for both risk assessment and cost calculations in workers' compensation insurance.