The workers’ compensation insurance market services over 140 million employees across the United States, equating to 94 percent of employees. This particular insurance industry is worth billions of dollars annually; most of the 50 states (including California) require businesses to have it. Because this is such a crucial insurance program for businesses of all size and type, it’s best to know everything about the product, including the system called the “Experience Modification Rate,” also known as an X-mod.
The X-mod is when companies are given a smaller premiums in return for the management of worker compensation claims. The rating essentially penalizes businesses that don’t have control over their claims process through charging higher premiums. An X-mod helps every business make great choices that positively impact the way that things are run, as well as costs. Learn how to manage your risks, reduce claims and minimize hits on your score; this is how an X-mod impacts your workers’ compensation cost in California.
What is an X-Mod?
Think of your X-mod as the blood of your company. It keeps track of how your company is doing over a period of time. Whatever your X-mod is actually determines what the cost of your workers’ compensation insurance premium is going to be for the year. The formula that encapsulates an X-mod incorporates several factors, including:
- Company size
- Unexpected unexpected large losses
- The difference between loss frequency and loss severity.
After looking a three-year period, the x-mod that is determined represents a credit or debit that is applied to your premium.
Managing Your X-Mod
If you’re wondering how you can control your X-mod, there are a few ways. And ISU Olson Duncan can help manage your risks with the following measures:
- Making sure that an accident prevention program is in place.
- Understanding that your X-mod is calculated by what past organizations have reported.
- If you’ve had small, infrequent losses, then it’s important to install a sound program in place to reduce your losses.
- If a self-inspection and accident investigation has to happen, Olson Duncan is going to help you out.
- Olson Duncan is going to make sure that every claim is reported quickly.
- Ensuring that a return-to-work program is in place for your lightly-injured employees.
- Training employees on safety and enforce violations when needed.
Once you’re able to identify the things that are going to affect your X-mod, it’s time to apply them. Without an X-mod, your workers’ compensation would be quite different, and likely come with a higher cost.
The Impact of an X-Mod
Statistically, you’re able to see what an X-mod can offer you. It gives you insight into the risks that you have as a business. If you’ve had one negative claim, it’s going to change the amount that you’re going to pay. By understanding what affects your X-mod, you can better manage your workers’ compensation costs.
About ISU/The Olson Duncan Agency
At ISU – The Olson Duncan Agency, our goal is to provide clients with a total solution, not just a quote or a contract. We provide businesses and individuals with insurance and risk management solutions, and we aim to provide real value and build trustworthy, long-term relationships with our clients. To learn more about our services, give us a call today at (310) 373-6441 to speak with one of our professionals.