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California’s Rating Bureau (WCIRB) Great E-Mod X-Mod Explanation

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California’s Rating Bureau (WCIRB)

The WCRIB – California’s Workers Compensation Rating Bureau (similar to NCCI) has written quite a few great plain-language documents on explaining how X-Mods (E-Mods, EMR’s, Mods,etc.)  affect employers.  One of those can be found by clicking here.

Their X-Mod formula is slightly different from most of the other rating bureaus including NCCI.

The Experience Rating Formula Rating Bureau Emblem from web
(c) wcirb.com

The bottom line is that Mods of any type are calculated with the formula:

                       E-Mod = Actual Losses  / Expected Losses

One of the areas that differentiate the CA WC system from most other states is the split points.  The NCCI had recently changed the split points.  A quick definition is that any loss values under the split points are much more costly than the amount after the split point.

In CA, the split point is 7,000 which is low compared to the recent increased NCCI split points.

According to the WCIRB –

“Actual losses are segregated into actual primary losses and actual excess losses. The first $7,000 of losses for a claim are considered primary losses. Any remaining amount above $7,000 is considered excess losses. Once segregated, the experience rating formula places additional weight on the primary portion. This additional weighting of primary losses places more weight on claim frequency than on severity and limits somewhat the impact of claim severity in the experience rating calculation.”  

Picture Businessman Giving Presentation Rating Bureau Explanation
StockUnlimited

As with all Mod calculations from any rating bureau, the emphasis is on penalizing employers that have many accidents while not penalizing a safe employer that had one or two very serious accidents.

There was one major change on how small employers are affected by losses.  CA no longer provides a small employer credit. See that article here.   If your company has less than $38,000 in Total Incurred your company needs to prepare for possibly a higher X-Mod.

Senate Bill 863 may have some effect on your X-Mod.  However, it will not affect how the Mod is calculated.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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