Indiana becomes latest state to ban e-mods in construction bidding

Starting July 1, Indiana will become the latest state to ban so-called “experience mods” from being used in the bidding process for contracts for employers.

H.B. 1214, signed into law April 16, states that a party may not prohibit an employer from bidding on a contract solely on the basis of the employer’s experience rating; multipliers known also as “e-mods” used to adjust a company’s workers comp premium based on past claims experience that have been deemed an unfair picture of an employer’s safety program.

Texas and Virginia are the only two other states that ban experience mods in construction bidding, albeit only for public projects. The Indiana law applies to all projects, according to a memorandum issued Thursday by The International Risk Management Institute Inc.

“Workers compensation insurance professionals have long known that the experience modifier is not, and was never intended to be, an accurate measure of a contractor’s safety program,” IRMI said. “It was developed as a premium adjustment tool, and while claims play a part in the calculation of the modifier, it is also influenced by external factors such as advisory rates, payroll, changes in the experience modification formula, and accidents in which the contractor’s employee was not at fault.”