Ratio of Actual to Expected Losses

        Understanding Your Modification Factor


By computing a simple ratio of actual to expected losses (both primary and excess), you can measure the degree to which your company’s losses differ from the expected loss values. This is a statistic that can be tracked over time to identify trends, improvements or problems relating to loss experience.

A mod analysis can provide valuable insight into your business operations and workers’ compensation losses. If you have a basic understanding of how a mod is calculated, you can use a few simple equations to gain a deeper understanding of the factors contributing to your number.