Underwriting – New Experience Rating Plan Effective 10/01/2022

Effective October 1, 2022, the Experience Modification Rating Plan has been restructured. An analysis of the current formula revealed those risks with a better-than-expected experience do not receive enough of a credit and those risks with worse than expected experience do not receive enough of a debit. 

The purpose of the change in the Experience Rating Plan is to incentivize workplace safety and improve its efficacy.

Learn More by Watching NYCIRB’s VideoRonnie Ratingboard Explains the Experience Rating Formula

Lovell’s Underwriting Experts are Here to Help! Call us at 212-709-8650, or email us at Info@LovellSafety.com.

New Experience Modification Rating Plan Formula

The new experience rating formula is simpler and will utilize a variable split point and a novel claim capping approach.  It will balance accuracy, stability, and equity as well as incentivize workplace safety.

Old Formula

New Formula
Old Mod = AP + (W x AE) + B + [(1-W) x EE]
                    EP + (W x EE) + B + [(1-W) x EE]

AP = Primary Actual Losses,  B = Ballast Value in Expected Losses

W = Weighting Value,   AE = Actual Excess

EE = Expected Excess,  EP = Primary Expected Losses

New Mod =  AP + EE

AP = Primary Actual Losses

EE = Expected Excess

E = Expected Losses

The complexity of the old formula is now built into the limited rating factors in the new formula.   The new experience modification rate sheet will reflect one of the three different calculations:

  • The New Calculated Experience Modification: the rating will be determined by the actual calculated rate using the new formula.
  • Capped Debit Modification: the rating will be determined by the Maximum Mod Chart. This chart will list the number of claims and the result of applying the cap based on the number of claims.
  •  Transitional Modification Factor: during the 1st year of the new formula (mods with the effective date between 10/1/22 and 9/30/23) the mod using the old formula will be calculated. The transitional modification factor will use the old formula plus .30.

Maximum Debit Modifications

As the new rating formula’s objective is to adequately balance accuracy and stability, modifications will be subject to a capping methodology.  The capping methodology will prevent excessive modifications from being applied.  If a risk under the new exp mod formula has a debit mod, the rating will be capped. The cap will be based on the number of reported claims in the experience modification period.

Number of Claims

Max Mod





4 or more

(.000003  x  EL) + 2

Transitional Modification Factor

During the first year of the new rating formula (October 1,2022 – September 30, 2023), if the modification under the new formula exceeds the modification from the old formula by more than 30 points, a risk’s modification will be capped at the mod derived by the old formula +.30.


  • New Formula Calculated Experience Mod:                   1.98                 
  • Capped Debit Mod. (3 claims in rating):                        1.75
  • Transitional Exp Mod factor:                     1.30 + .30 =  1.60

NYCIRB will promulgate a Transitional Mod of 1.60 as it results in the lowest mod of the three approaches.  In trying to determine or verify the capped modification promulgated, we have been advised by the Rating Board that they will not be publishing the updated values used in the old formula as these factors will only be used for the transitional period.     

Other Changes in the New Experience Rating Plan

  • Merit Rating Plan: The merit rating plan will be discontinued, and the new experience rating formula will apply to all risks insured in New York State with exposure (regardless of size) during the experience period.
  • Interstate Rating Plan: New York State has withdrawn from the NCCI interstate rating plan. Risks will be rated based only on their New York experience.
  • Ownership Changes: Changes in Ownership for risks that were interstate rated will no longer report their updated ERM-14 forms to the NCCI and going forward they will file with the Rating Board.

 Terms to Know

  • Experience Period:  This refers to a timeframe in which the policies used in the formula to determine the experience rating modification.  This is calculated by the Rating Board once they are in receipt of the carrier’s data
  • Expected Losses: the anticipated total loss during the experience rating period. This is based on the risks class codes and payrolls.  To determine a risk expected losses, you must multiply each classification Expected Loss Rate (ELR) by payroll and then dividend by 100.  The sum of the expected losses for all classifications for all policy periods in the rating will represent the risk’s expected losses.  The Rating Board will publish a chart of the ELR rates.
  •  Split Point: is a dollar value that divides losses for each claim into primary and excess components. Split Points vary by risks and can be determined by the risk’s expected losses in the experience rating period.  Under the new formula, only the primary component of actual losses is considered in the mod determination.
  •  D- Ratio:  ratios of primary losses to expected losses for each class and risk size.  We will have to refer to the Rating Boards published D Ratio Tables.
  • Expected Primary Losses – A risk’s expected primary losses for each classification code is determined by multiplying the expected losses for each classification code by the D-Ratio for the risks’ split point.
  •  Expected Excess Losses: The risk’s Expected Excess Losses for each classification code is the difference between the classifications Expected Losses and Expected Primary Losses.
  • Actual Premium Losses: A risks’ losses are reported losses limited by the split point value.

How to Determine the Policy History to be Included in the Experience Rating Calculation

EMR is calculated by the New York Compensation Insurance Rating Board (NYCIRB) using the risk’s claims history and audited payrolls for three years ending one year before your current policy expires.  For example: The 4/1/22 EMR will include the data from 4/1/20, 4/1/19 and 4/1/18.  *However, if there has been a rate date change or a policy with a different effective date, the experience/data can be included for 4 years.  If that should happen, please refer to the following chart of the data/experiences used in a rating: To figure out the data/experience that is used in a rating is as follows:

  • List the Experience Rating Modification Effective Date: 4/1/22
  • Add 3 months to the date: 7/1/22
  • Subtract 2 years from the date: 7/1/20
  • Subtract 3 years from the date: 7/1/17

The data/experience that would be included in a 4/1/22 EMR would range from the effective dates on or after 7/1/17 though policies with an effective date on or before 7/1/20. Also, it is important to note that annually when rates are published, there are also revised factors that are published by the NY Compensation Insurance Rating Board used in the experience rating formula. Yearly, the revised rate and factors are effective October 1, 20_.  The class code rates will vary from year to year and have either a positive or negative effect on the calculation of the insured’s premium.  The factors used in the experience rating formula will also vary from year to year.  To determine these rates and factors we would retrieve this data from the NYCIRB website, and it will be listed in their bulletins.

Have Questions?

Our experts are available to assist you with questions you may have with experience rating or any workers’ compensation related matter.  While the above may seem complicated, the key to managing your experience rating is reducing reportable claims.    If a workplace injury should occur the first thing you should do is contact Lovell at 1-800-556-8355.  Our experts are here to help, to provide guidance and work with you to keep your workers’ compensation costs to a minimum.