What does the eMod Factor represent?

The eMod Factor, or Experience Modification Rate, is specifically designed to reflect a company's loss history in relation to the risk of workers' compensation claims. This factor is calculated based on the company’s past loss experience compared to the industry average. A lower eMod indicates that a company has fewer or less severe claims than average, which can lead to lower insurance premiums, while a higher eMod suggests a greater frequency or severity of claims, potentially resulting in higher premiums.

The significance of the eMod Factor lies in its role in assessing the likelihood of future losses based on historical data, directly influencing the cost structure of workers' compensation insurance for a business. This adjustment helps to create a more equitable system by rewarding companies with better safety records while charging higher rates to those with worse records. Thus, option B accurately describes the core function of the eMod Factor, focusing on the company's loss history.