For many businesses, workers’ compensation is one of the most significant insurance expenses. At McConkey, we believe understanding how your rate is calculated is the first step toward gaining control over this cost and protecting your bottom line.
Classification Codes and Payroll
Every employee is assigned a classification code based on the nature of their work. These codes are established by the National Council on Compensation Insurance (NCCI) or a state-specific bureau and come with a base rate that reflects the level of risk.
Your premium is calculated by multiplying the classification rate by your payroll in that class, per $100. That’s why proper employee classification and accurate payroll reporting are so important. Mistakes in either can lead to overpaying—or costly surprises during audit season.
The Experience Modification Factor
Your experience modification factor, often called a “mod,” compares your company’s historical loss experience to similar businesses in your industry. A mod of 1.00 represents average expected losses. If your company has fewer and less severe claims, your mod could be lower than 1.00, which reduces your premium. A higher mod typically increases costs.
Because the mod is driven by your loss history, investing in safety programs and effective claims management can directly lower your rate over time.
The Captive Program Difference
Traditional insurance markets can feel like a black box—premiums rise or fall with little explanation. That’s where group captives come in. As a captive member with McConkey, you gain access to a more transparent and collaborative model.
Captive members benefit from:
- Greater control over claims handling
- Shared safety and risk management resources
- The opportunity to earn back underwriting profits and investment income
This structure rewards strong performance and creates long-term stability for your business.
Why It Matters
When you understand how your workers’ compensation rate is calculated, you can take meaningful steps to influence it. With accurate classifications, proactive safety efforts, and the power of a captive behind you, you’re no longer at the mercy of the traditional market.
To learn more about McConkey’s captive program and how we help businesses like yours reduce insurance costs while improving outcomes, contact us today.
