1) What is an Xmod?
Answer: It is the factor resulting from the statistical comparison of a company?s Workers? Compensation loss history to the loss history of an average company of the same size and the same operations in California. For example, if a company has a better than average loss record, their ex-mod would be less than 100%.
2) Is an Xmod of 100 bad?
Answer: An Xmod of 100 is exactly average. That factor applied to your Workers? Compensation premium will cause no change. An Xmod over a hundred means your losses are worse than the industry average and your premium will rise. Likewise, an Xmod of lower than 100% means your experience is better than the industry average and will reduce your premium.
3) If I don?t have any claims, will my Xmod be Zero?
Answer: No. There is a floor level for your Xmod based on your payroll and industry.
4) Which policy years are taken into account in my Xmod?
Answer: The current policy year and the previous year are not included in the rating period, but the three prior years are included. If your policy were to incept January 1, 2007, the policy beginning in 2006 would not be included. The Xmod factor would come from the loss experience of the policies that began in 2005, 2004 and 2003.
5) Who calculates my Xmod?
Answer: Your Xmod is calculated by the Workers? Compensation Insurance Rating Bureau of California (WCIRB), a California unincorporated, nonprofit association comprised of all companies licensed to transact Workers? Compensation insurance in California and has over 400 member companies.
The WCIRB is a licensed rating organization and the designated statistical agent of the California Insurance Commissioner. The WCIRB collects premium and loss data on every Workers? Compensation policy in California and makes recommendations for rates with the Insurance Commissioner.
6) What is an Expected Loss Rate?
Answer: The Expected Loss Rates are based on projections of industry loss data for the upcoming policy period which is applied to the specific payroll of a given company to produce the expected losses for a company of that size in the given industry classification.
7) What is a D Ratio?
Answer: The D Ratio is the ratio of losses deemed by industry statistics to be preventable to the losses deemed not preventable.
Are there other factors used in the experience calculation?
Answer: Yes. Along with the expected loss rate and D ratio, there are other factors determined by the WCIRB developed to give the formula credibility for all size employers.
9) What variables specific to my company are used in the experience calculation?
Answer: The only variables used are your claims and payroll for the rating period.
10) Does a claim need to be closed to be used in calculating my Xmod?
Answer: No. Paid and reserved totals for a particular claim valued 6 months after each policy expiration are used in your calculation.
11) Do small claims and large claims have the same affect on my Xmod?
Answer: No. Small claims are considered ?preventable?, so if a company has a lot of them, it indicates that the company is not doing enough to prevent them. The formula is weighted to take a higher percentage of small claim values than large claim values into account.
12) What can I do to control my Xmod?
Answer: The only variable in the Xmod calculation you can control is your claim experience. Preventing claims before they occur and managing them once they occur Following is a list of ways to prevent and manage claims:
Loss Prevention
- Create/Improve your Safety Program
- Identify Specific WC Cost Drivers to Develop a Meaningful Cost Reduction Strategy
- Ergonomics
- Behavioral Safety
- Remedial Training
- Accident Investigation
Claim Management
- Accident Reporting
- Active Involvement in Claim Resolutions
- Return to Work Program
- Claims Reviews (with Professional Advocate) Prior to Calculation of Ex mod
& Underwriting Submission - Medical Management
- In-house Claim Management & Vendor (Carrier/TPA/Other) Performance Evaluation
Our Workers? Compensation Loss Control, Safety and Claim Management experts have many years of experience helping clients reduce their Ex Mods, and they are available to answer any questions you have about yours. Email us with questions or use the form to the right.
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