What is the formula for calculating an eMod Factor?

The formula for calculating an eMod Factor, which is used in workers' compensation insurance to measure an employer's loss experience in relation to expected losses for similar employers, is derived from the ratio of actual losses to expected losses.

In this context, the eMod represents how much more or less a business has paid in claims compared to what would be anticipated based on its size and type of industry. When the actual losses exceed expected losses, this could indicate higher risks associated with the workplace, potentially resulting in higher premium costs. Conversely, if the actual losses are lower than expected, it may reflect safer work conditions or effective risk management, which could lead to reduced insurance premiums.

The other choices do not align with the established method of calculating the eMod. Understanding this formula is critical for businesses to assess their risk profile and manage workers' compensation costs effectively.