Which experience modification factor suggests that an insured has had a relatively high frequency and severity of losses recently?

The experience modification factor (EMF) is a critical component in workers' compensation insurance that measures a company's safety record compared to others in the same industry. A factor of 1.00 is considered the industry average, suggesting that the company has a standard number of claims relative to the average business.

When the EMF is above 1.00, such as 1.10, 1.25, or 1.50, it indicates that the insured has experienced a higher frequency or severity of losses than the average. In this context, a factor of 1.25 indicates a notable increase in claims, while 1.50 suggests a significantly elevated number of claims or high costs associated with those claims.

Thus, a 1.25 factor reflects a higher-than-average frequency and/or severity of losses, demonstrating that the company has had relatively more significant claims than its peers, which could lead to higher premiums. This understanding of EMF is vital for adjusting and managing risk, as well as for insurance pricing strategies within the workers' compensation framework.