X-Mod is insurance jargon for “experience modifier” and is a multiplication factor used to adjust base rates on an employers workers compensation premium. When starting out as a new employer, your business may not be experience rated. This means the Workers Compensation Insurance Rating Bureau (WCIRB) has not assigned your business an experience modifier. However, the more expensive your class code (the type of work you do) and the more employees you hire, the sooner the WCIRB will come knocking to evaluate your business.
It is extremely important to manage your loss prevention
Q. What does the WCIRB use to determine the experience modifier?
A. They look at your claims and divide it against your premium, to calculate an average against the average number of workers comp.
Many insurance companies will require that your business have an experience modifier, and that it is within an acceptable range for your class code for them to offer competitive workers compensation insurance rates. Insurance companies are looking for businesses that have lower than average loss experience.
In many cases, if you are new in business, have too high of an x-mod due to losses, or are in a difficult line of work, insurance companies may be reluctant to offer coverage.
To find out how your business can lower your loss experience ratio to get access to better rates, download your free special report, “5 Things Every Business Owner Should Know About Workers Compensation Insurance.”
