Your Experience Modification Factor can be explained as follows:
The mod is a ratio of actual losses to expected losses over a 3 year period
If your actual losses are more than expected, then your mod is over 1.0
If your actual losses are less than expected, then your mod is under 1.0
A mod of 1.0 is exactly average
The years used in the mod factor are the last three audited policy terms. This means there is a one year gap between your mod year and the years of claim and payroll data used. This is to assure accurate payrolls and provide an opportunity to finalize and close claims when possible. Below is a visual.