Demystifying Your X Mod Rating: Who Calculates It and When
As a business owner, you are well aware that managing Workers’ Compensation insurance can be a complex and overwhelming responsibility. One critical element that significantly impacts your insurance premiums is your business’ Experience Modification Rating (X Mod). While some might view the X Mod rating as just a single data point, it is the most crucial factor outside of payroll that influences your yearly workers compensation premium. In this comprehensive article, we will delve into the X Mod Rating, explaining who calculates it, when it is calculated, and how to use this knowledge to your advantage.
The Importance of X Mod Ratings
Our team at Whiteboard has spent the past eight years specializing in Workers’ Compensation insurance and X Mod management, discovering that it is the critical data point that can swing all your Work Comp quotes in one direction. As X Mod Experts, we have assisted approximately 450 companies (and counting) in saving tens to hundreds of thousands of dollars each year. In this article, we are eager to share some of our valuable insights and experience with you.
A high X Mod Rating can result in significantly inflated insurance premiums, which can adversely affect your company’s bottom line. On the other hand, a low X Mod Rating indicates that your company has performed well in the Workers’ Compensation space and is rewarded with lower insurance premiums. Understanding how your X Mod Rating is calculated and when it is updated can help you better manage your Workers’ Compensation insurance costs and potentially save your business a substantial amount of money.
Who Calculates Your X Mod?
The Worker’s Compensation Insurance Rating Bureau of California (WCIRB) is responsible for calculating your X Mod annually. This statewide rating bureau provides third-party, objective input into Worker’s Compensation matters, ensuring that no single carrier or broker wields excessive power and authority over insurance rates. The WCIRB serves as a liaison between businesses, brokers, and insurance carriers, creating a fair and consistent experience rating system for all companies in California.
The idea behind California’s Workers’ Compensation experience rating system is to provide a direct financial incentive to business owners who consistently maintain a safe workplace. The WCIRB uses the same formula for calculating the X Mod for all companies in the state, ensuring a level playing field.
When is Your X Mod Rating Calculated?
Many business owners discover their X Mod when renewing their insurance, either through their current broker or a new broker attempting to win their business. However, the X Mod calculation occurs much earlier than your renewal and is officially posted sooner than you might expect.
Halfway through each annual insurance policy, your Unit Statistical Filing date takes place, during which the WCIRB receives your data from the past four years to calculate your next X Mod. This data includes payroll, claim data (or loss data), financial data from the insurance carrier, any audits conducted by the insurance company, and more. The WCIRB then takes all these data points from any carriers you have worked with in the last four years and begins calculating your X Mod.
It usually takes the WCIRB about three months to determine your official X Mod. This information is crucial for forecasting your next year’s premium, offering you insight into your yearly insurance costs.
Maximizing the Benefits of Your X Mod Rating
Armed with the knowledge of who calculates your X Mod and when, you can now use this information to benefit your business.
For clients of Whiteboard, our X Mod Experts calculate your upcoming X Mod three months earlier than the WCIRB. Once your Unit Stat Date passes, we estimate your future Experience Rate without waiting the additional three months for the WCIRB. We then provide your team with the updated X Mod and a forecast of your future premiums, ensuring your team has ample time to prepare, or hopefully celebrate!
Taking a proactive approach also enables us to identify and correct any errors before you face increased premiums due to a faulty X Mod. We find mistakes that negatively impact your X Mod nearly 70% of the time. Addressing these issues early ensures your business is always putting its best foot forward.
If you want to forecast your X Mod or future premiums, connect with our X Mod Experts today!