How to Read a California Workers' Compensation Experience Rating Worksheet

The short version

Your X-Mod arrives as a single number, but it is built from a page or two of detail that WCIRB prepares every time it calculates the mod. WCIRB calls that document the Experience Rating Form, and it is also known as the experience rating worksheet, X-Mod worksheet or ratesheet. It lists the policies in your experience period, the payroll your insurers reported in each classification, the expected losses WCIRB derives from that payroll, every claim reported for those policies with its value and its primary portion, and the totals that produce the mod.

Nothing on the worksheet is negotiable, but everything on it is checkable. The payroll should match your final audit statements. The claims should match your loss runs. The policy years should be the right ones. When any of those do not line up, the mod is wrong in a way that can be corrected, and the worksheet is where you find it.

A realistic scenario

A plumbing and mechanical contractor in Bakersfield with eleven field employees receives a renewal notice with an X-Mod of 1.18, up from 1.04 the year before. The owner's broker pulls the worksheet.

The first thing they notice is a claim listed under the oldest policy year that neither of them recognizes: a $16,000 indemnity claim with a claim number that does not appear on the company's loss runs. The second is that the payroll for the middle year does not match the final audit for that policy. The third is that a $31,000 claim from the most recent year in the period, a shoulder injury the owner knows was caused by a third party's forklift at a jobsite, shows its full value with no indication that the insurer recovered anything from the forklift operator's carrier.

Each is a different kind of problem. The unrecognized claim may belong to another employer with a similar name, or may be the company's claim under a different number; either way it needs to be traced. The payroll mismatch is a reporting error the insurer can correct with a revised unit statistical report, which WCIRB then uses to recalculate the mod. The shoulder claim may have a subrogation recovery that was never reported to WCIRB, one of the recognized grounds for revising a claim's value. In this scenario the broker and the insurer resolve two of the three before the renewal, and the revised mod comes in at 1.09. Nothing changed about the company's history; the data describing it was corrected.

Before you start: what the worksheet is and is not

The worksheet is a report of what your insurers told WCIRB, valued as of specific dates. Insurers report each policy's payroll and claim values on unit statistical reports, the first of which is generally valued about eighteen months after the policy began, with annual updates after that. The mod uses the values on those reports as of their valuation dates. A claim that closes for less a month after the valuation date is still carried at the higher value in this mod, and the lower value flows into the next one.

So you are comparing the worksheet to your records as of the valuation date, not as of today. A loss run printed this week will often show lower values on closed claims than the worksheet carries, and that difference is not an error. A payroll figure that does not match your audit, a claim that is not yours, or a claim whose compensability or subrogation status is wrong are errors.

Section by section

The section names below follow WCIRB's own description of the Experience Rating Form.

The heading

The top of the form identifies the employer, the insurer, the policy and the other details used in the rating. Below the employer's name and address is a list of Bureau Assigned Classifications, the codes WCIRB has assigned to your operations (8810 clerical and 8742 outside sales are not listed there). The Effective Date is the date the mod takes effect, usually your policy effective date, though it can differ for split policies or corrections. The Issue Date is when WCIRB first released the worksheet to the insurer. Insurer and policy information shows the insurer, insurer group, policy number and issuing office.

Check that the name is yours, that the assigned classifications describe what your company does, and that the effective date matches your upcoming renewal. If you changed ownership, merged with another plumbing company or bought one, the names should reflect WCIRB's ownership determination, because a material change in ownership affects which prior experience is combined into your mod.

Summary of payroll and expected losses

This section opens with the Primary Threshold, the maximum value of any one claim used as a primary loss. It is set from a table in the plan based on your total expected losses, so it rises with the size of your company, and the table is updated each year.

Payroll is then grouped by policy under Policy Information, each policy identified by insurer code and policy year. The experience period is three years, beginning four years and nine months before the rating effective date and ending one year and nine months before it, and only completed policy periods are used. For a plumbing company that renews on the same date every year, that normally means three annual policies, and not the one you are renewing now. Confirm the right policies are there and that none is missing because an insurer failed to report. A policy with no unit statistical report leaves a hole in both payroll and claims, and if you changed insurers during the period, the year of the switch is the first place to look for one.

For each policy the form lists the Classification Code(s), the Payroll in each, the Expected Loss Rate (the average benefit cost per $100 of payroll for that classification), and Expected Losses (payroll divided by 100 times the expected loss rate). A D-Ratio for each classification splits expected losses into a primary part, and the totals appear as Expected Primary Losses and Expected Excess Losses (total expected losses minus expected primary losses).

This is the section where misclassification becomes a permanent part of the mod. Look for three things:

• Clerical and sales payroll rated as plumbing. An office manager whose payroll was reported in 5183 or 5187 instead of 8810 inflates expected losses, which lowers the mod slightly but means the audit was wrong and the premium overcharged. The reverse error, field payroll reported as clerical, understates expected losses and pushes the mod up.
• The dual-wage split. Plumbing payroll should appear in both 5183 and 5187 if some employees earn above the hourly wage threshold and some below. All payroll in one code may mean the records did not support the split at audit, or that the insurer reported it incorrectly.
• Payroll that does not match the audit. Compare each year's figures to the final audit statement for that policy. A mismatch is a reporting problem your broker can take up with the insurer.

The total of expected losses across the experience period is the denominator of the mod. Expected losses are also what WCIRB compares to the eligibility threshold to decide whether you are experience rated at all. The threshold is adjusted annually in Section III, Rule 1 of the plan: it was $10,400 for ratings effective September 1, 2024, $10,800 under the plan effective September 1, 2025, and $11,700 for ratings effective on or after September 1, 2026, under the changes the Insurance Commissioner approved for that date. Check the plan in effect for your rating date.

Summary of claims and actual losses

Below the payroll, the form lists each claim by Claim Number, with an Injury Type code (death, permanent disability, temporary disability, medical-only and so on), an Open/Closed status as of the last valuation, the claim's Actual Losses (its total medical and indemnity value at the last valuation date) and its Actual Primary Losses. WCIRB describes the injury type and open/closed fields as informational; they do not change the calculation. A medical-only claim and a lost-time claim of the same value count the same.

Actual primary losses follow the plan's rules. The first $250 of each claim is removed, so a claim of $250 or less counts as zero. Above that, the claim counts up to the primary threshold, less the $250. Whatever lies above the threshold is excess and is not used. Death claims that are solely work-related are carried at an average value from the plan rather than their actual cost, and joint, subrogated and non-compensable claims are handled under specific rules.

Work through the list with your loss runs beside it:

1. Is every claim yours? Match claim numbers and dates. An unrecognized claim, like the Bakersfield contractor's, has to be traced.
2. Is every claim of yours on the list? A missing claim will appear on a later report, possibly after the mod has been issued.
3. Does the value match the loss run as of the valuation date? Ask your insurer for the loss run valued at the unit statistical date, not today.
4. Has the claim's status changed in a way that permits revision? A claim determined non-compensable or a subrogation recovery are grounds for revising its value. A single claim that merely closed for less generally is not, unless the closed claims together have fallen below the 60 percent test in Insurance Code section 11751.9.
5. Which claims exceed the primary threshold? Their excess portion is doing nothing to the mod, which tells you whether frequency or severity is driving the number.

The experience modification

The form ends with the Experience Period Totals of the expected and actual loss columns, the resulting Experience Modification, and a Loss-Free Rating, the mod you would have had with no claims at all, shown for information. The plan's formula is:

Experience Modification = (Actual Primary Losses + Expected Excess Losses) ÷ Expected Losses

Expected excess losses stand in for your actual excess, which is how the excess portion of each claim carries no weight. Expected primary losses appear on the form for information but are not part of the formula. One more rule: if only one claim in the experience period has primary losses above zero, the mod is limited to no more than 25 points above the loss-free rating.

An illustrative example (made-up figures, not a real worksheet): suppose a company's worksheet shows expected losses of $90,000, expected primary losses of $27,000 and therefore expected excess losses of $63,000, with a primary threshold of $25,000. Its loss-free rating is $63,000 ÷ $90,000, or 0.70. It has four claims:

The mod is ($42,250 + $63,000) ÷ $90,000 = 1.169, or about 1.17. Claim B's $6,250 above the primary amount has no effect; claim A, at roughly half B's size, contributes nearly two-thirds as much.

Recalculating your own worksheet this way takes five minutes. It will not change the number, but it shows which year and which claims are pulling it, and it turns the mod from a verdict into a spreadsheet you can reason about.

What to do with what you find

Sort every discrepancy into one of three groups.

Reportable corrections. Payroll that does not match the audit, a claim that is not yours, a claim determined non-compensable, a subrogation recovery never reported, an ownership change WCIRB has not recognized. These go to your insurer, through your broker, with documentation; the insurer corrects its unit statistical report and WCIRB revises the mod. Move quickly: the plan's rules on whether a revised mod reaches back to the original effective date depend in part on when the error is raised and when the revision is published, so a correction raised early in the policy term protects more of it. Ask your broker how the timing rules apply to your correction. Seven common issues to review in a plumbing contractor's X-Mod covers the most frequent ones.

Timing issues. An open claim reserved high as of the valuation date that has since closed for less. This is generally not correctable in the current mod (the narrow closed-claim exception in Insurance Code section 11751.9 aside), but it will improve the next one, and it tells you to review open reserves with the adjuster before the next valuation date.

Real history. Claims that are yours, valued correctly, in the right year. The only response is prevention and return-to-work going forward. What to do when your plumbing company's X-Mod increases covers the response to a mod that is accurate and still too high.

Practical takeaway

Ask for the worksheet every year, as soon as the mod is published, and read it in order: heading, payroll and expected losses, claims, modification. Put your final audit statements and a loss run valued at the unit statistical date next to it. Mark every line that does not match, sort the mismatches into corrections, timing issues and real history, and send the corrections to your insurer before the renewal is bound. Then calendar the next valuation date so open claims can be reviewed before they are reported.

The Bakersfield contractor's 1.18 was not his history. It was a stranger's claim, a payroll report that did not match the audit and a subrogation recovery nobody passed along. The worksheet showed all three; the mod alone showed none of them.

If you want a licensed producer to read the worksheet with you, the X-Mod review page explains what to send and what the review checks. It does not change WCIRB's formula; it confirms the inputs are right.