What defines Tier 2 for employers regarding experience modification factor?

Tier 2 is defined for employers in terms of experience modification factor as being equal to or greater than 1.0, but not greater than 1.10. This classification indicates that the employer's loss experience is slightly above average, signifying that their workers' compensation claims are somewhat higher than what would be expected based on their payroll and industry type.

In practice, this means that employers in the Tier 2 category are expected to face higher insurance premiums due to their elevated risk profile. The experience modification factor serves as a critical tool in determining the employer's premium; a value in Tier 2 reflects an increased likelihood of claims as compared to their peers, hence justifying the premium they are charged.

Understanding this classification assists agents and employers in assessing and managing risk, helping them make more informed decisions regarding safety programs and loss control measures to potentially lower their experience modification factor in the future.