The key to calculating Workers Compensation premium is what’s known as the experience modification factor, also known as your X-mod, for each business. Understanding your company’s X-mod and the data used to obtain it helps you identify ways to minimize your Workers Compensation premium.
In California, the Workers’ Compensation Insurance Rating Bureau (WCIRB) compares the performance of employers within the same industry classification, and applies an experience modification factor, which determines an employer’s premium. The formula to calculate your X-mod incorporates several factors, including your company size, unexpected large losses and the difference between loss frequency and loss severity.
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