Experience modifications (experience rating) compare the employer’s actual claims with the employer’s statistically expected claims. The amount of statistically expected claims depends upon the amount of payroll in each classification. Therefore, understating payroll and misallocating payroll into lower rate classifications lessens the amount of the employer’s expected claims. This makes the actual claims experience worse in comparison. Consequently, payroll fraud usually makes the experience modification go up, although typically not enough to offset completely the overall premium reduction. Therefore, to estimate the amount of premium fraud, it is important to recalculate the experience modification(s), as this will usually reduce the “amount of the fraud.”