On the other hand, a credit mod of .5 means the rates are half the industry average. The NCCI also provides more information on experience modifications . Although the rules vary from state to state, the following is generally true. The experience modification is a three year rolling average. The frequency or number of claims has a greater impact than severity or dollars paid.
Claims impact the experience modification only if money is paid out by the insurance company.
These claims are required to be reported to a statistical agency, such as a state rating bureau. Dividend Plans Sometimes called participating plans. The amount of dividend is usually dependent on the losses of the insured, i.e. lower losses will produce a higher dividend. The amount of potential dividend is shown on a chart given to the insured. The exact percentage is voted on each year by the board of directors of the insurance company and can not be guaranteed.