The minimum mod is not the same for all companies. For small companies (as measured by expected losses), the minimum mod can be in the range of 0.90. As the size of the company increases, the minimum mod decreases. For very large companies, the minimum mod may be 0.40 or even lower. Knowing your minimum mod is important for large and small companies. A large company with a mod of 0.95 may still be able to achieve significant savings through loss control and loss prevention activities. The company may perceive the 0.95 mod as “good.” However, if the minimum mod is 0.50, there is significant room for improvement. For a small company, the minimum mod can be used for setting realistic expectations; for example, a small company that sets a goal of having a 0.80 mod will not be able to achieve it under any circumstance if the minimum mod is 0.85.
Properly analyzing your mod can help you identify loss areas, set accurate goals and validate the cost of safety initiatives.