How to Reduce Your Janitorial Company’s Ex-Mod

If your janitorial company is facing rising workers’ compensation costs, your experience modification factor (ex-mod) may be the key driver. A high ex-mod increases premiums, while a lower ex-mod can significantly reduce insurance costs and improve profitability.

Understanding how to manage and reduce your ex-mod is essential for controlling claims, improving safety outcomes, and maintaining a competitive insurance program.

Key Takeaways

• A higher ex-mod directly increases workers’ compensation premiums
• Janitorial companies often face elevated claim frequency due to job risks
• Reducing injuries is the most effective way to lower your ex-mod
• Claims management and safety programs impact long-term costs
• Proactive risk strategies improve insurability and profitability

How Your Janitorial Company’s Risk Profile Impacts Your Ex-Mod

Janitorial work involves some risks. Cleaning crews are often working with hazardous chemicals, and they are involved in physical labor that could result in back injuries and slip-and-fall incidents. They may also be working alone at night, potentially putting them at risk for violent crime. Taken all together, it’s reasonable to assume that janitorial companies will have higher workers’ compensation claims rates than very low-risk industries, such as accountants. However, the claims are likely to be lower than they are for very high-risk industries, such as construction. Workers’ compensation premiums use class codes to reflect this.

However, this is only what’s expected. Your particular janitorial company may have an excellent safety record and almost no worker injuries. Alternatively, your janitorial company may have far more worker injuries than other janitorial companies of the same size. That’s where your ex-mod factor comes into play. This variation in claims experience is what ultimately drives differences in ex-mod and workers’ compensation costs between companies.

What Is the Ex-Mod and How Does It Impact Workers’ Compensation Costs?

The experience modification factor, or ex-mod for short, is a figure often used in workers’ compensation premium calculations to account for an individual company’s loss history relative to the loss history of similar companies. A good ex-mod will bring your rates down, while a poor ex-mod will raise your rates.

For a more detailed understanding, it’s necessary to know a little about how workers’ compensation rates are calculated. The typical formula multiplies three factors to arrive at your premiums:

• Your annual payroll divided by 100
• Your class code rate
• Your ex-mod

The inclusion of your annual payroll means that companies with more employees or higher paid employees pay more for workers’ compensation insurance. The inclusion of the class code rate means that companies that employ workers in high-risk positions also pay more. Finally, the inclusion of the ex-mod means that companies with a poor loss history pay more. From an insurance perspective, the ex-mod is one of the most important factors influencing premium pricing and long-term cost control.

What Is a Good Ex-Mod for Janitorial Companies?

A neutral ex-mod is 1.0. Multiplying any number by 1.0 does not change the number, so an ex-mod of 1.0 does not change your premium. Your company may have an ex-mod of 1.0 if your company’s loss history is exactly average for similar companies or if you just don’t have enough claims history to calculate an ex-mod, for example, because your company is new.

An ex-mod of above 1.0 is poor because it will raise your costs. The higher the number, the steeper the rate hike. For example, if your annual premium is $100,000 before the application of the ex-mod, and if you’re ex-mod is 1.2, it will increase your workers’ compensation premiums to $120,000 (calculated as $100,000 X 1.2).

An ex-mod of below 1.0 is good because it will lower your costs. The lower the number, the better. For example, if your annual premium is $100,000 before the application of the ex-mod, and if your ex-mod is 0.5, the ex-mod will reduce your workers’ compensation premiums to $50,000 (calculated as $100,000 X 0.5). Even small increases above 1.0 can significantly raise costs, especially for growing janitorial companies with large payrolls.

Why Janitorial Companies Often Have Higher Workers’ Compensation Costs

Janitorial companies often experience higher workers’ compensation costs due to frequent, repetitive exposures such as slips and falls, chemical use, and physically demanding work. Without strong safety controls and training, these risks can lead to recurring claims that negatively impact the ex-mod.

How to Reduce Your Ex-Mod and Lower Workers’ Compensation Costs

Reducing your ex-mod is one of the most effective ways to lower workers’ compensation costs over time. Because the ex-mod is based on your claims history, improving safety performance and managing claims effectively are critical to long-term cost control.

Since the ex-mod typically reflects three years of claims data, improvements made today will influence future premiums. Reducing workplace injuries can also improve employee morale and retention, further strengthening operational performance.

Here’s what you can do:

• Adhere to all relevant regulations and best practices for janitorial companies, including OSHA standards for cleaning services.
• Train your workers on all safety procedures and the importance of following them.
• Implement controls for the biggest risks. Review the most frequently cited OSHA safety standards for cleaning service companies as well as your own claims history to pinpoint the biggest risks to your workers.
• Build a company culture that prioritizes safety. Does your company treat safety standards as a nuisance or as a vital tool? Company culture can have a big impact on whether safety rules are followed carefully and consistently.
• Give your workers properly fitting personal protective equipment. When working with hazardous chemicals, personal protective equipment is a must, but workers may not use it if it doesn’t fit properly.

Without proactive risk management, a high ex-mod can continue to drive increased premiums and reduce competitiveness in bidding and contracts.

Lower Your Ex-Mod and Take Control of Workers’ Compensation Costs

Managing your ex-mod requires more than reducing injuries—it requires a strategic approach to claims handling, safety, and risk management. Without the right support, costs can continue to rise year over year.
Tangram Insurance Services specializes in janitorial and building services, offering workers’ compensation programs designed to reduce claims, improve outcomes, and control long-term costs. Explore our Janitorial and Building Services Program to learn how we can help you improve your ex-mod and protect your bottom line. Learn more.