Experience Modification Explained

Workers’ compensation must be in place for all CA businesses that have employees.

Naturally, some businesses have more employees, more payroll, and more workers’ compensation claims that other businesses.

Business size, payroll, and claims history all affect your experience modification.

Your experience modification (x-mod) can positively or negatively affect your business’ workers’ compensation premium. A “normal” x-mod is 1.00 anything over that (e.g., 1.50) leads to increased premium; anything lower than 1.00 (e.g., 0.78) leads to a discounted premium.

So what exactly is an x-mod?

Experience Modification

The experience modification is calculated from loss information that an insurance company is required to submit to the WCIRB on an annual basis. The WCIRB uses a mathematical formula approved by the CDI to calculate an experience modification for each employer.

The formula takes into account reported paid losses, claim loss reserves, and payroll amounts for a specific experience period (usually the prior three complete years of workers compensation coverage).

The experience modification indicates the average loss experience of employers throughout a similar industry and acts as a means of comparison between employers. When the experience modification is applied to the class rate, along with any other modifications (schedule or judgment), the final rate is multiplied per $100 of payroll and the estimated premium is established.

via CA Department of Insurance


If you feel you’re x-mod is not accurately rated, schedule an x-mod consult today. There is no cost to you, and potential for savings.