Building Easier AI

Ten Small Injuries Can Raise Your Comp Mod More Than One Big One

Two employers each have $50,000 in workers' comp losses. One had a single $50,000 injury; the other had ten at $5,000 apiece. In the worked example NCCI uses to teach its experience rating plan, the ten-injury employer "receives a much higher mod than the 1-injury employer, even though its total losses are the same."

The mod is the multiplier the plan puts on a workers' comp premium, and NCCI is the rating organization that publishes the plan. Its example is an illustration, not a measurement of real employers, but it shows the design: the plan weighs how often people get hurt more heavily than how badly.

That runs against instinct. An owner remembers the big claim and shrugs off the ordinary ones on a jobsite or shop floor: a strained back, a fall from a stepladder, a week or two off work for each. Claims like those are what the formula leans on, and NCCI built it that way on purpose.

Check whether the plan reaches you first

NCCI's experience rating plan has two limits that come before any arithmetic, because for some readers they end the conversation.

First, the plan "does not apply in California, Delaware, Michigan, New Jersey, New York, or Pennsylvania." Nor does it apply in the four monopolistic states, North Dakota, Ohio, Washington and Wyoming, which NCCI says "administer their own plans and rates." In Minnesota and Wisconsin it applies only to an employer with "exposure in two or more participating states." If your work is in one of those ten states, or only in Minnesota or Wisconsin, the mechanics below are NCCI's, not necessarily your state's. Ask your agent how yours is built.

And a small firm may not be experience rated at all. The plan starts at a premium threshold, and NCCI says the eligibility requirements "are established and approved on a state-by-state basis." Its guide illustrates the test with a hypothetical state that "requires $14,000 in audited premium subject to experience rating in the most recent two years of the experience period OR an average of $7,000 in the overall experience period." In the guide's worked table, either test comes to about $7,000 of premium a year (our arithmetic). That is NCCI's illustration, not any real state's rule. Below your state's threshold, the guide says, an employer gets a "unity" mod of 1.00, which leaves the premium where it is. Once you meet it, there is no opting out. In NCCI's words: "if an employer meets the eligibility requirements, then experience rating is mandatory."

How NCCI's example weighs ten claims against one

NCCI's example of the two employers comes from its guide, ABCs of Experience Rating, and the passage is short enough to read whole:

> "an employer with 10 small losses of $5,000 each has a much larger primary loss total than an employer with a single loss of $50,000, even though each would have a loss total of $50,000. An employer with a single loss of $50,000 has $18,500 in primary losses, and the rest is excess. Because of the relative weightings, the 10-injury employer receives a much higher mod than the 1-injury employer, even though its total losses are the same."

The plan divides losses into a primary part and an excess part, and it weights them differently. In the example, $18,500 of the one big loss counts as primary and the other $31,500 is excess (our subtraction). That $18,500 is the example's split point; NCCI says each state's split point is approved in its own rate or loss cost filing, so don't carry the figure onto your own claims. The ten small losses add up to "a much larger primary loss total," and NCCI puts the higher mod down to "the relative weightings."

The split works claim by claim, and the guide spells out the rule. Primary loss is "the amount of any ratable individual loss up to the split point," and "for individual losses below the split point, the entire amount is primary loss." Then: "primary losses have a greater weight in the formula than excess losses." So each claim brings its own primary portion: ten claims carry ten, and one claim carries one, however large it grows. A very large claim is also capped at a state accident limitation, and NCCI says the amount above it "is excluded from the calculation of the employer's mod."

NCCI's reason is prediction, not punishment. Of two similar employers, its guide says, "the one with the higher frequency of losses will generally have higher future workers compensation costs."

Size changes the weights too. The weight on excess losses "is a small percentage for small employers and increases with the size of the employer," so for a small firm a big claim's excess counts for even less. And for a small employer, the guide adds, the plan tempers both the debit from one large loss and the credit for having none: "The larger an employer, the more its mod calculation is influenced by its own experience."

One adjustment matters for small claims in particular. In most states, NCCI's guide says, a medical-only claim (medical bills, no payment for lost wages) counts at 30% of its primary and excess amounts: "medical-only claims are reduced by 70%." NCCI's example doesn't say whether its ten $5,000 losses were medical-only, and the difference is large. Ten medical-only claims of $5,000 would bring $15,000 of primary loss into the mod, not $50,000 (our arithmetic), which is less than the big claim's $18,500.

What the passage doesn't give is a size. It says "much higher" and puts no figure on it, and it is a teaching example with round numbers, not a study. Read it as the direction of the effect, not its weight on your policy.

The counterweight: comp's share of pay has fallen by more than half since 2004

Nothing in NCCI's example means your premium is running away from you, and the federal numbers say the opposite.

In BLS's Employer Costs for Employee Compensation for June 2026, published Sept 9, construction employers paid $1.10 in workers' comp for every hour worked, 2.1% of total compensation, against $0.43 (0.9%) for all private industry (BLS ECEC dataset). That is more than two and a half times the all-industry rate per hour (our arithmetic). It is also an average across construction employers of every size and trade, union and not, so your own figure will differ.

And it has been falling. Construction's workers' comp share of compensation was 5.1% in June 2004, 3.4% in June 2019 and 2.1% in June 2026, the lowest June share in a series that starts in 2004, if only by a tenth of a point. Per hour it has gone from $1.40 to $1.10 in nominal dollars, before inflation (our read of BLS's dataset). NCCI's State of the Line presentation in May 2026 put two words on a slide: "Frequency declining."

BLS is about to stop measuring it. "With the March 2027 release of December 2026 data," the survey "will remove workers' compensation costs from ECEC calculations." BLS gives two reasons: workers' compensation "suffers from a substantially lower item response rate than other NCS benefits," and it "only makes up about 1 percent of total compensation" (BLS). Construction's share is the 2.1% above. After that, the workers' comp series stops.

For a small crew the stakes are modest. An illustration, not your premium: six people working 2,000 hours a year each, at construction's $1.10 average, is about $13,200 a year in workers' comp. A mod 0.10 higher on a premium that size adds roughly $1,320. Real money, not a crisis. Run the same arithmetic on forty people and it is about $88,000 and $8,800. The arithmetic is ours, and it simplifies twice: it treats all of BLS's per-hour cost as premium the mod multiplies, and it starts from a mod of 1.00. Read it as a sense of scale, not a quote.

So the argument here is narrower than a premium scare. The mod is a lever on a cost you already pay, and of the two things it reads, how often and how badly, how often is the one the plan weighs more heavily.

The part of the mod you control

The wrong lesson from NCCI's example is to stop reporting small injuries. Report every one. The lever is fewer injuries, not fewer reports, and the medical-only discount exists partly to keep it that way: NCCI says it "decreases the incentive for employers to pay medical-only claims without reporting them to the insurance provider."

The work is to read your injuries the way you read a punch list, looking for the item that keeps coming back. On a framing crew that might be blade cuts or lifting strains; in a fabrication shop, grinder cuts; for a field-service company, ladders. Look for the physical fix first: the guard back on the grinder, the right ladder on the truck, a second person on the heavy carry.

The other lever is return to work. NCCI's guide says the plan includes "an incentive to enable injured employees to return to work as soon as reasonably possible," and that an employer's involvement "can reduce the severity of losses once they have occurred." It puts no number on either, so ask your agent and your carrier what bringing an injured worker back on modified duty, once their doctor clears it, does to a claim's cost in your state.

None of this is construction-specific. In an NCCI state, a fabricator with grinders and a service company with ladders are rated on the same plan as a remodeler with a framing crew.

Read your own worksheet before the renewal

Your mod comes with an experience rating worksheet, and NCCI says the mod is calculated "generally 60 to 90 days before the rating effective date," so the worksheet exists before your renewal does. Ask your agent for it, along with your loss runs, the carrier's list of every claim and what it has cost.

NCCI's guide shows where the numbers in this piece sit. The summary page carries your state's split point, your actual primary losses and your expected primary losses, which the plan builds from the expected losses for your classifications and payroll. If actual primary runs above expected, the part of your mod NCCI ties to frequency is pushing it up. The claim detail lists claims over $2,000 by number, with an injury type and, in the last column, the actual primary loss; claims of $2,000 or less may be grouped together by injury type.

Then work down the claim detail with three questions. Which claims put the most into actual primary? Which were medical-only (injury type 6 on NCCI's worksheet), and so counted at 30% if your state uses the adjustment? And the one only you can answer: what were your people doing when the rest happened? The task that comes up more than once is the first fix.

Expect to wait for the result. In NCCI's example, a mod effective January 1, 2026 uses policies that started in 2022, 2023 and 2024, and the next renewal drops the oldest year and adds the newest. On that schedule, the injuries you prevent under this year's policy show up in the mod about two renewals from now (our reading of NCCI's example), and a claim that does happen generally stays in the calculation for three mods. Bring the count down by fewer injuries, never by fewer reports.