Construction WC Frequency Down 40%: Why Your Mod Isn't
NCCI's 2026 State of the Line shows construction lost-time frequency down 40% since 2015. Medical severity up 13% in the same year. The mod formula sees both, and one is running faster than the other.
Construction lost-time claim frequency has fallen nearly 40 percent since 2015, more than any other industry (NCCI 2026 State of the Line). Yet individual contractor mods often don't reflect that improvement, because the experience rating formula compares each employer to the industry average. When the whole industry improves, the average improves too. Matching that average earns no mod credit. Medical severity rising 13 percent in construction adds to the pressure.
Construction lost-time claim frequency has fallen nearly 40 percent since 2015 (NCCI 2026 State of the Line). More than any other industry. The safety record, by this measure, is genuinely better.
So why are so many contractor mods sitting above 1.00?
How Experience Rating Uses Industry Frequency Data
The experience modification rate (EMR, also called "the mod") doesn't measure how safe you are in absolute terms. It measures how you perform against what NCCI (National Council on Compensation Insurance) expects from employers in your classification and size.
That expectation is built into a figure called the Expected Loss Rate (ELR): the projected cost of claims per $100 of payroll for your class code. ELRs are updated regularly based on industry-wide loss experience. When the entire construction industry improves on frequency, expected losses for construction class codes fall. Your ELR drops.
The catch: if your actual claim experience drops at the same rate as the industry, your actual-to-expected ratio stays flat. The mod doesn't move. You need to outperform the industry average to see mod credit, not just keep pace with it.
The Severity Running in the Other Direction
NCCI's 2026 State of the Line data shows construction medical claim severity rising 13 percent in Accident Year 2024 (NCCI 2026 SOL Guide). Across all industries, medical severity grew 4 percent. Construction is running at more than three times the national average on this metric.
Severity matters disproportionately to the mod because of how the experience rating formula handles claim size. Every dollar below the state's split point is charged at 100 percent to your primary loss layer. Dollars above the split point enter the excess layer, where they're discounted. When severity rises 13 percent across the industry, claims that used to stay comfortably below the split point can cross it. And a claim sitting just below the split point, particularly one that grew through complications or slow reserve updates, hits the primary layer in full.
Fewer claims. Each one more expensive. The two trends don't cancel out cleanly in the mod formula.
You Have to Beat the Average, Not Match It
The 40 percent frequency decline since 2015 is an industry trend, and ELR tables reflect it. A contractor whose frequency has fallen 40 percent since 2015 has matched the industry average. The mod calculation sees no improvement from that match.
A contractor running frequency 10 to 15 percent below peers in the same class codes is the one who gets mod credit. The data in the NCCI SOL Guide tells you where the industry is. Your mod worksheet tells you where you are relative to it. Most contractors know their mod number. They don't know whether that number reflects above-average, average, or below-average loss experience for their specific trade.
In our reviews of Southeast contractor worksheets, the most common surprise isn't the headline mod. It's learning that a 0.98 mod represents below-average performance relative to class-code peers, while a 1.08 mod at a different contractor reflects genuinely above-average safety given their trade mix and payroll size. The number without the context means less than it looks.
What the Severity Trend Means for 2026 Renewals
Medical severity at plus 13 percent feeds into the next NCCI rate filing cycle. If severity remains elevated while frequency continues its slower-than-historical decline, loss costs rise. Rising loss costs put upward pressure on filed rates in NCCI states. That pressure affects everyone, but it compounds for contractors whose mods sit above 1.00.
The calendar year combined ratio came in at 91 in 2025, up from 86 (NCCI 2026 State of the Line). The accident year ratio crossed 100. Those two numbers together signal that the soft market runway is shorter than it was two years ago. Contractors with elevated mods are the ones who will feel the first turn.
What an Audit Would Check
An audit on a construction contractor's worksheet looks at whether the class codes assigned to the employer's operations match the actual work being performed, whether the ELRs loaded in the current mod calculation are current, and whether any claims are generating primary loss in excess of what the underlying facts support. A claim coded to a higher-hazard class code than the actual work inflates expected losses and masks the mod's true direction. A claim coded too low inflates actual losses relative to a lower ELR base. Both distort the actual-to-expected ratio that drives the mod calculation.
If your mod hasn't moved despite fewer claims over the past two years, send us your NCCI worksheet for a mod review and we'll show you where the formula is creating pressure.