Workers’ compensation is one of the biggest insurance costs a labour-heavy business carries, and one of the very few where the price is calculated rather than quoted at you. That calculation has three inputs. Payroll by class code, the rate for each class, and your experience modification factor. Every one of them is worth auditing.
Classification errors come up most often. People get coded into whatever class was in use when they were hired, then their duties change and the code never follows. An estimator who now sits in the office but is still coded to a field class can cost you several times what the right classification would.
Experience mod errors are rarer but they hurt more. The mod compares your claim experience against what would be expected for your classification and payroll size, and it gets calculated from data the carriers submit. That data has mistakes in it. Claims left sitting open at their original reserve long after they settled for less. Claims dropped into the wrong policy period. Subrogated recoveries that never got credited back to you.
Because the mod multiplies your entire premium, a small error in it turns into a large error in what you pay. And because it’s calculated on a three-year rolling window, that error sticks around for three years unless somebody challenges it.
Auditing it isn’t complicated. Pull the mod worksheet. Check each claim against your own records. Confirm the reserves reflect where those claims stand now. Check the classifications against what people do. Anything you find is correctable, and corrections are often backdated.
Beyond fixing errors, the mod is something you can manage. Return-to-work programmes that get injured staff back on modified duty cut claim costs a lot, and because the mod is experience-based, that saving compounds into lower premiums for years afterwards.