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California Xmods = Heavy Penalty For Repetitive Accidents


California Insurance Commissioner Approves 2017 Changes

California Xmods also known as Experience Modification Factors calculations are changing drastically in 2017.  A very important term for California employers  in the next few years is the term variable split point.

graphic of two hand protect California Xmods insurance

Split points are the amount at which the Total Incurred for a claim has much more of an effect on an employer’s X-Mod.

Variable split points are not the same as the split point changes enacted by NCCI over the previous years.   NCCI now has its split point set at $15,000 from $5,000 just a few years ago.  Search the term split points in the search box for more articles on the changes by NCCI.

How variable split points work is the total expected losses for the Experience Period have much more of an effect than just the prior California split point of $7,000.  In other words, the size of the employer will determine the split point.

According to the WCRIB:

  • Approximately 90 Primary Threshold split points
  • Values range from $4,500 to $75,000
  • Ranges based on the employer’s total expected losses in the experience period
  • Final values will be updated and proposed to Insurance Commissioner in the 2016 WCIRB Regulatory Filing

The interesting fact is the effect on California Xmods may not be known until the Insurance Commissioner approves the final levels.

The most important fact is the 2017 and forward X-Mod system is going to punish employers that have repetitive accidents.   The concept of a variable X-Mod will also lessen the effect of one huge claim on a small

The claim amounts up to the split point are used fully in the x-mod calculation.  This is the same as NCCI’s split points with one major exception.

Map of California Xmods and Logo

Claim amounts above split point are not used in x-mod calculation.   One of the main differences between the NCCI and WCIRB split points is that NCCI still uses the Excess loss in its calculations.  NCCI excess losses are in a roundabout way – discounted.   California will be basically creating the split point as more of a ceiling.

You can find the PowerPoint(r) slides here on the changes to the X-Mods.

Unsafe smaller employers have already seen a major change to the way their X-Mods are calculated by the WCIRB.  I attended a 2013 WCIRB conference which introduced a new X-Mod formula that removed a credit for small employers.

The goal here is plain and simple- safety.

Related: Combined Ratio Difference Debate – Calendar vs. Accident Year

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management 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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