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 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.”
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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