An experience modification is the adjustment factor applied to a contractor's workers' compensation premium based on their actual loss experience compared to the industry baseline for their classification and size. Understanding what an experience modification is takes about five minutes. Evaluating whether yours is accurate and managing it effectively takes a structured process.

This checklist provides that structure. It walks through every step a contractor should take to verify, understand, and improve their experience modification. Use it annually when your new EMR arrives, and revisit the claims management sections quarterly.

Phase 1: Verify Your Current Experience Modification

Before analyzing or improving your EMR, confirm that the number itself is correct. Errors in the underlying data are more common than most contractors realize.

Step 1: Obtain Your Full NCCI Worksheet

Do not rely on the single EMR number your broker provides. Request the complete experience rating worksheet from NCCI (or your state rating bureau in non-NCCI states). This document contains every data point that feeds the calculation.

Checklist items:

Received full experience rating worksheet (not just the summary page)
Confirmed the worksheet is for the current rating period
Verified company name and FEIN match your legal entity
Confirmed the correct policy effective date appears
Checked that the correct insurance carrier is listed for each policy year

Step 2: Cross-Reference Claims Data

Every claim on the worksheet should match your carrier's loss run. Discrepancies indicate data that was incorrectly submitted to NCCI.

Checklist items:

Obtained current loss runs from your insurance carrier for each policy year in the experience period
Compared each claim number on the worksheet against carrier loss runs
Verified incurred amounts (paid + reserves) match between worksheet and loss runs
Checked that no claims from other entities appear on your worksheet
Confirmed no duplicate claim entries exist
Verified each claim falls within the correct policy year
Identified any claims that are listed as open but should be closed

Step 3: Audit Class Code Assignments

Wrong class codes distort the expected loss calculation, which shifts your EMR in ways that have nothing to do with your actual safety performance.

Checklist items:

Listed every class code on the worksheet
Confirmed each class code matches the actual work performed by those employees
Verified that office and clerical staff are classified under code 8810, not a field operations code
Checked that supervisory employees are classified correctly (some states have specific supervisor codes)
Identified any employees who changed job functions during the experience period and may have been reclassified incorrectly

Class Code Audit Question	Yes	No	Action Required
Are all field workers in the correct trade code?			Verify with carrier
Are office staff coded as 8810?			Request reclassification
Are multi-trade operations split correctly?			Review with auditor
Do codes match actual work performed?			File correction if not
Are executive exemptions applied correctly?			Check state rules

Step 4: Verify Payroll Figures

Payroll is the exposure base in the EMR calculation. Incorrect payroll figures distort expected losses, which distorts the modification rate.

Checklist items:

Compared payroll figures on the worksheet against completed premium audit reports for each year
Verified that overtime is reported at straight-time equivalent (not including premium pay)
Confirmed subcontractor payments are not included as payroll (requires valid certificates of insurance on file)
Checked that payroll is allocated to the correct class codes
Verified any state-specific payroll caps or limitations are applied correctly

Phase 2: Analyze Your Claims Portfolio

With verified data in hand, analyze the claims themselves to identify patterns and management opportunities.

Step 5: Map Claims in the Experience Period

Create a clear picture of every claim affecting your current EMR and how long each will remain in the calculation.

Checklist items:

Listed every open and closed claim in the current experience period
Noted the policy year each claim falls in
Identified which claims will drop out of the experience period next year
Flagged any claims with incurred values above the NCCI split point ($18,500 for 2026)
Calculated total primary losses (first $18,500 of each claim) vs. total excess losses
Identified the claims contributing the most to primary losses

Step 6: Review Open Claims Reserves

Open reserves are the single most actionable item in the EMR equation. Reducing inflated reserves reduces your EMR at the next valuation.

Checklist items:

Listed all open claims in the experience period with current paid and reserved amounts
Identified claims where reserves seem disproportionate to the injury type
Requested formal reserve reviews from the adjuster on flagged claims
Obtained updated medical status reports on all open lost-time claims
Checked whether any open claims are eligible for settlement
Verified that closed claims show zero reserves (sometimes reserves linger after closure)

Step 7: Evaluate Claims Management Practices

Look at how claims were handled to identify process improvements that will reduce future EMR impact.

Checklist items:

Reviewed average time from injury to first report for all claims in the experience period
Identified claims that were reported more than 48 hours after injury
Checked whether nurse case management was initiated on all lost-time claims
Reviewed return-to-work outcomes for each lost-time claim
Assessed whether any claims could have been prevented with existing safety protocols
Identified training gaps or safety program weaknesses revealed by claims patterns

Phase 3: Project Your Future Experience Modification

Use the data you have gathered to forecast where your EMR is heading and identify actions to influence that trajectory.

Step 8: Calculate Projected EMR

Work with your broker to model your next-year EMR based on current data.

Checklist items:

Identified which policy year will drop out of the experience period at next renewal
Calculated the expected loss impact of the dropping year
Added the most recent completed policy year (which will enter the experience period)
Identified any new claims in the entering year that will affect the calculation
Modeled the EMR under current claim valuations
Modeled the EMR assuming successful reserve reductions on identified claims
Compared projected EMR against GC prequalification thresholds for target projects

Step 9: Build an Improvement Action Plan

Based on your analysis, create a targeted plan to improve your experience modification over the next 1-3 rating periods.

Checklist items:

Prioritized claims where reserve reductions would have the most EMR impact
Identified safety program improvements that address the root causes of claims in the experience period
Established or reviewed return-to-work program with specific modified duty positions
Set a target EMR for next year based on realistic projections
Assigned ownership for each action item (broker, safety director, claims manager)
Scheduled quarterly reviews to track progress against the plan

Phase 4: Manage Subcontractor EMR (For General Contractors)

GCs carry the additional responsibility of evaluating and tracking subcontractor experience modification rates as part of prequalification.

Step 10: Establish Sub EMR Requirements

Checklist items:

Defined EMR threshold for subcontractor prequalification (most common: below 1.0)
Documented tiered requirements if applicable (auto-approve below 0.85, review between 0.85-1.0, reject above 1.0)
Included EMR documentation requirements in subcontract language
Established a waiver process for subs that exceed the threshold with extenuating circumstances
Defined what EMR documentation is acceptable (NCCI worksheet, carrier letter, state bureau verification)

Step 11: Implement Ongoing EMR Monitoring

Checklist items:

Collected current EMR documentation from all active subcontractors
Set calendar reminders to request updated EMR at each sub's policy anniversary
Compared year-over-year EMR trends for each sub
Flagged subs with deteriorating EMR trends (increasing year over year)
Integrated EMR tracking into prequalification platform (SubcontractorAudit or equivalent)
Built EMR status into project safety dashboards

Sub EMR Monitoring Action	Frequency	Responsible Party
Collect EMR documentation	At prequalification	Prequalification team
Update EMR on file	Annually (policy anniversary)	Compliance coordinator
Review EMR trends	Quarterly	Safety director
Flag threshold exceedances	Immediately upon discovery	Automated system alert
Report EMR portfolio to owners	As required by contract	Project executive

Phase 5: Annual Review Cycle

The experience modification is not a one-time evaluation. Build these steps into your annual risk management calendar.

Step 12: Schedule Annual EMR Review

Checklist items:

Scheduled annual EMR review meeting within 30 days of receiving new worksheet
Included key participants: safety director, risk manager, insurance broker, CFO
Prepared comparison of current vs. prior year EMR with explanation of changes
Updated 3-year EMR trend chart
Documented all correction requests filed and their outcomes
Reviewed effectiveness of prior year's improvement action plan
Set updated targets and action items for the coming year

Frequently Asked Questions

What is an experience modification in the simplest terms? An experience modification is a multiplier, usually expressed as a number around 1.0, that adjusts your workers' compensation insurance premium based on your company's past claims compared to similar companies. Below 1.0 means you pay less than average. Above 1.0 means you pay more.

How often should I review my experience modification? Review the full NCCI worksheet within 30 days of receiving it each year. Review open claims reserves quarterly. Conduct a comprehensive evaluation following this full checklist at least annually, ideally 90 days before your policy renewal.

Who is responsible for experience modification accuracy? Ultimately, you are. While your insurance carrier reports the data to NCCI and your broker facilitates corrections, no one else has the same incentive to verify accuracy. Make EMR review a formal part of your risk management program.

What documentation should I keep for my experience modification file? Maintain copies of your NCCI experience rating worksheet for at least five years, carrier loss runs for each policy year, premium audit reports, any correction requests filed and their outcomes, and your annual EMR analysis. This documentation supports audit readiness and enables trend analysis.

Can a single large claim ruin my experience modification permanently? No. A single claim stays in the experience period for three rating years. After that, it drops off entirely. However, the financial impact during those three years can be substantial, and the formula's treatment of that claim depends on its size relative to your company's expected losses.

Should I use this checklist for subcontractors too? GCs should adapt Phases 1-3 for evaluating key subcontractors with high EMRs. Understanding why a sub's EMR is elevated helps you assess whether they are actively improving or whether the risk will persist on your projects.

Automate your experience modification tracking and sub EMR monitoring. Request a demo to see how SubcontractorAudit collects, verifies, and reports on EMR data across your entire subcontractor network.