Determining your workers compensation insurance premium may seem like a complicated exercise. While there are several factors that go into arriving at the final number, you should know that this also presents opportunities to reduce costs. One of the items in the calculation is called an experience modification, or X Mod. What is an insurance X Mod and how can it help save you money?
Why Does it Affect Cost?
The mod rate is essentially a multiplier that is used to compare the relative safety of your company to others in a similar industry. It is assigned based on a three-year history of incident claims. If they are above average then you will be given a rating somewhere over 100, and if below average it will be less than 100. This is then combined with payroll numbers and classification rate to arrive at the final premium cost.
How Can it Save Money?
The simple answer is that if the X Mod is reduced then insurance premiums will go down as well. If your company has a history of incidents that are above the norm, then attention needs to be given to safety aspects that drive workers comp claims.
The insurance X Mod greatly affects the money invested in workers comp insurance. By promoting safety, training and investigative measures you can reduce incidents which will ultimately lower costs.