How is the Modified Premium calculated?

The Modified Premium is a calculation that adjusts the standard premium amount based on the experience modification factor (eMod). The experience modification factor is a numerical representation of a company's safety record, which can either increase or decrease the amount of premium owed.

When calculating the Modified Premium, the correct method involves multiplying the standard premium by the eMod factor. This means that if a company has a favorable eMod (below 1.0), the Modified Premium will reflect a lower premium amount compared to the standard premium. Conversely, if the eMod is above 1.0, indicating a poorer safety record, then the Modified Premium will be higher than the standard premium.

This adjustment allows for a more accurate and equitable premium that reflects the actual risk associated with a specific business, encouraging improved safety practices among businesses.