Why Your California Workers' Comp Ex-Mod Went Up, and What Can Still Be Done About It

An experience modification, the ex-mod or X-Mod on your workers' compensation policy, is a multiplier on your premium: 100 is the average for your industry mix, 125 means you pay 25 percent more on every payroll dollar, 85 means 15 percent less. When it jumps at renewal, the cause is almost always one of five things, and three of them have nothing to do with a new injury. This article explains how the Workers' Compensation Insurance Rating Bureau of California (WCIRB) builds the number under the plan in effect for ratings on and after September 1, 2026, where the increase usually comes from, which parts of the calculation can be corrected and which cannot, and the deadlines that apply. Every figure is cited to the plan text or the WCIRB's own publications.

How the mod is built, in the 2026 plan

The California Workers' Compensation Experience Rating Plan (the ERP, filed as 10 CCR section 2353.1) sets the mechanics. The version effective September 1, 2026 reads as follows (WCIRB, Experience Rating Plan effective September 1, 2026):

Element	2026 rule
Who is rated	Any employer whose expected losses over the experience period are at least $11,700; "Any risk eligible for experience rating shall be experience rated" (§ III Rule 1). The threshold was $10,800 for 2025 ratings and has been adjusted in each recent annual filing
Experience period	Three years, "commencing four (4) years and nine (9) months prior and terminating one (1) year and nine (9) months prior" to the rating effective date (§ III Rule 2). The policy expiring at the rating date is not in it
Formula	Modification = (Ap + Ee) / E: actual primary losses plus expected excess losses, divided by expected losses (§ VI Rule 6)
Primary losses	For each claim, the actual incurred loss minus $250, counted up to a primary threshold that depends on the size of your expected losses: $4,500 for the smallest employers, $10,000 at about $25,000 to $28,000 of expected losses, $30,000 at about $271,000 to $295,000, $50,000 at about $1.16 to $1.23 million, and $75,000 at $4.93 million and above (§ VI Rule 2 and Table II)
Excess losses	The part of each claim above the primary threshold. Since 2017 it carries no weight in the formula; only the expected excess appears, as a constant
Maximum loss value	Any single claim is capped at $175,000 before the split (Table II)
Single-claim cap	An employer with only one claim in the period cannot be moved more than 25 points above its loss-free rating (§ VI Rule 6); the cap does not apply to a rating computed excluding unaudited payroll (§ III Rule 3)
What a claim is worth	Indemnity incurred plus medical incurred: everything paid plus the insurer's reserve for future payments, as reported at the valuation date (§ VI Rule 2; USRP Part 4 definitions)

Expected losses are your audited payroll by classification, divided by 100, times the expected loss rate for each class (§ VI Rule 5). The WCIRB states the purpose plainly: primary losses "represents the more predictive and controllable portion of the claim" (§ VI Rule 2), and the plan "places a clear and direct emphasis on reducing the occurrence and cost of workplace injuries as reflected in the actual primary losses" (WCIRB, Experience Rating Formula).

The arithmetic that follows from those rules is the single most important thing to understand about a California mod. Take an employer whose primary threshold is $10,000. One $60,000 claim contributes $9,750 of primary loss (the threshold less $250); the other $50,000 is excess and counts for nothing. Three $20,000 claims, the same $60,000 in total, contribute $9,750 each, or $29,250: three times the damage from the same dollars. Frequency drives the mod; severity, past the threshold, does not. The WCIRB's own worked example on the formula page makes the same point with a $15,000 claim: "your primary threshold ($10,000) less $250, or $9,750."

The five reasons a mod goes up

1. A claim year rotated into the window and a clean one rotated out. The experience period moves forward a year at each renewal. A rating effective September 1, 2026 uses the three policy years that began between December 2021 and November 2024, each valued as of its most recent unit statistical report. An injury from two years ago that was not in last year's rating is in this one, and a clean year from five years ago has aged out. Nothing about your current operation changed; the window did.

2. Reserves, not payments. The claim values in the formula are the insurer's incurred figures at the valuation date, which the Uniform Statistical Reporting Plan defines as paid losses plus "the insurer's individual case estimate of all future indemnity payments on the claim" and the same for medical (WCIRB, Uniform Statistical Reporting Plan effective September 1, 2026, Part 4, Section II). A claim on which $4,000 has been paid and $60,000 reserved enters the mod at $64,000. Whether the claim is open or closed does not change the calculation, except through the closed-claims rule described below; the value at the valuation date does. The WCIRB's Policyholder Ombudsman page devotes a short video to the question of why a claim "can appear costly even when little has been paid" (WCIRB, Employer Resources).

3. Your expected losses fell. The mod compares actual losses to expected losses. If payroll dropped, if a class was reassigned to one with a lower expected loss rate, or if the WCIRB's expected loss rates for your classes changed at the annual filing, the denominator shrinks and the same claims produce a higher ratio. Employers who downsized or who moved payroll into clerical and outside-sales classes often see a mod rise in the following cycle for exactly this reason.

4. Reporting errors. The insurer reports payroll and losses to the WCIRB on unit statistical reports. Payroll assigned to the wrong class, a subrogation recovery never credited, a claim found non-compensable but still carried at full value, or a claim that belongs to a different policy period all show up as a wrong mod. These are correctable, within limits described below.

5. Someone else's experience became yours. Experience follows ownership. If you acquired a business, or combined with one under common majority ownership, the WCIRB combines the experience (§ IV Rule 2), and if you sold or discontinued part of an operation the prior experience still attaches to what remains and to any new operation you own a half interest or more in (§ III Rule 3). The ombudsman's statement of the rule: "An owner cannot dispose of their company's payroll and loss experience by selling the business and starting a new one" (WCIRB, Ask the Ombudsman).

Start with the worksheet

Every rated employer is entitled to "a single copy of its current Experience Rating Form free of charge upon request" (ERP § V Rule 5), and the WCIRB takes the request through an online form (WCIRB, Policyholder Experience Rating Worksheet Request). Your agent or broker of record can also pull it through WCIRB Connect. The worksheet shows each policy in the experience period, the payroll by class, the expected loss rates, each claim with its incurred value, and the resulting primary and excess amounts. It also prints the loss-free rating, the mod you would have with no claims, which tells you how much of your number is losses and how much is structure.

Check five things against your own records:

1. The policies listed are the right three, and none is missing or duplicated.
2. Payroll by class matches the final audit for each policy. Unaudited payroll is excluded from the calculation and flagged on the form.
3. Each claim's value matches your carrier's loss run as of the valuation date, which is 18 months after the month the policy began for the first report, 30 months for the second and 42 for the third (USRP Part 4, Section I, Rule 2).
4. Nothing is in the mod that the plan excludes: COVID-19 claims with accident dates from December 1, 2019 through August 31, 2024 are excluded (ERP § VI Rule 2), and claims found non-compensable or reduced by subrogation recoveries qualify for correction.
5. The ownership on file is right, including entities that were sold, bought or combined.

What the plan lets you fix, and what it does not

This is where most expectations go wrong, so the rule is worth quoting. The ERP does not allow a mod to be revised because a claim turned out better than its reserve: "It shall not be permissible to revise values because of department or judicial decisions or because of developments in the nature of injury between two valuation dates" (§ VI Rule 7a). A claim reserved at $60,000 at the valuation date and settled for $45,000 a year later stays at $60,000 in the ratings that used that report, unless the closed-claims rule below applies. The WCIRB's guide says the same: "The WCIRB is not permitted to revise an experience modification simply because a claim changes in value."

What the plan does allow:

• Corrections of error. Loss values "included or excluded through mistake other than error of judgment," a claim "determined to be non-compensable," a subrogation recovery or a portion "declared fraudulent," certain compromised death claims, and joint-coverage determinations are grounds for a revised report that adjusts the current and immediately preceding ratings (§ VI Rule 7a).
• The closed-claims rule. If claims used in a rating are later reported closed and the aggregate value of all closed claims is less than 60 percent of the highest value at which each was previously used, the WCIRB revises the rating, and a revision under this rule can only lower the mod, never raise it (§ VI Rule 8).
• Ownership and classification corrections, under their own rules and time limits (§ IV Rule 3 for ownership; USRP Part 3, Section VI, Rule 3 for classification assignments).

Corrections reach "the current experience modification or the two immediately preceding experience modifications." A corrected mod that is lower applies retroactively to the original effective date. A corrected mod that is higher reaches back to that date only if it is published, or the WCIRB was notified in writing of a possible error or notified the carrier that the rating was under review, within three months of the rating's effective or publication date; otherwise it applies from the date it is published, and it is not applied at all if published three months or less before the rating expires (§ V Rule 6). The time to act on a wrong mod is the week it arrives, not the week before renewal.

The dispute path and its deadlines

The plan's dispute procedure (§ VII) runs in order, and each step has a clock:

Step	Deadline
Written Inquiry to the WCIRB explaining why the mod is wrong	Within six months after the mod is issued, or twelve months after it expires, whichever is later (§ VII Rule 1); an inquiry about a revision of losses under § VI Rule 7 is not subject to that limit. You must answer the WCIRB's requests for information within 60 days or the inquiry closes (§ VII Rule 2)
Complaint and Request for Action if the inquiry decision is unsatisfactory	Within 60 days after the WCIRB's decision on the inquiry, or once 90 days have passed without a response (§ VII Rule 2); governed by 10 CCR §§ 2509.40 and following
Reconsideration by the WCIRB	Within 30 days of service of the decision on the complaint (10 CCR § 2509.45)
Appeal to the Insurance Commissioner, heard by the Department's Administrative Hearing Bureau	Within 30 days of the WCIRB's rejection or reconsideration decision; authority in Insurance Code § 11753.1 (text)

The WCIRB also has a Policyholder Ombudsman, a position state law defines as independent, reachable at 415-778-7159, who answers questions for free; contacting the ombudsman is not a written Inquiry under § VII and does not pause the six-month or twelve-month clock. In our experience, the disputes that succeed are not arguments about judgment; they are documentation of a reporting fact the carrier got wrong, which is why the worksheet review comes first.

Before the next rating: the 18-month valuation

The lever you control is the next unit statistical report. The first report on a policy is valued 18 months after the month of inception and due at the WCIRB at 20 months; the second at 30 and 32 months; the third at 42 and 44 (USRP Part 4, Section I, Rules 2 and 3). The rating uses the latest report "due to be filed with the WCIRB no later than one month prior to the effective date of the experience rating" (ERP § III Rule 3). The value of every open claim on those dates is what enters your mod.

That makes the 90 days before each valuation date the period to work:

• Reserve review with the adjuster. Ask for the basis of every open reserve. Reserves set early in a claim and never revisited are the most common inflation we find, and a reserve revised before the valuation date is what gets reported; a revision after it does not reach that report.
• Close what can be closed. A settled, closed claim is reported at its final value. An open claim is reported at paid plus reserve.
• Return to work. Indemnity (lost-time) payments and the reserves that anticipate them are what separate a medical-only claim from an expensive one. Modified duty that ends the indemnity exposure can change the number the adjuster carries.
• Report small claims. Since 2019 the first $250 of every claim is excluded from the calculation, which the WCIRB says "removes any experience rating incentive to not report the cost of small or 'first aid' type claims" (Experience Rating Formula page). Handle first-aid cases properly; hiding them is not what protects the mod.
• Confirm the audit. The payroll the carrier reports is the payroll the WCIRB uses. Get the final audit statement, check it against the classes you expect, and dispute a misclassification with the carrier before it becomes a reported figure.

Ownership changes

If your entity structure changed, the WCIRB needs to hear about it through the ownership information submission tool on WCIRB Connect, which replaced the old Form 601 (WCIRB, Changes in Ownership). Your broker or insurer submits it. The plan drops prior experience only when a material change in ownership, one that leaves the prior owners with less than a half interest, is accompanied by a material change in operations or in employees within 90 days (§ IV Rule 1), and it prohibits "the use of subterfuge or device in any form to evade the promulgation or application of an experience modification" (§ I Rule 6). Under that rule and the ownership rules, forming a new entity does not shed the experience, and an evasion finding lets the WCIRB "take any action permitted by law to preclude such evasion."

The 2026 rate backdrop

A mod multiplies a rate, so the rate matters. For policies effective on and after September 1, 2026, the Insurance Commissioner approved advisory pure premium rates averaging $1.65 per $100 of payroll, a 6.6 percent increase over the 2025 approved level as restated on current payroll weights; the WCIRB had proposed 10.4 percent (CDI, July 10, 2026; WCIRB Bulletin 2026-11). For September 1, 2025 the approved average was $1.52, an 8.7 percent increase over 2024 (CDI, July 15, 2025). Two consecutive increases after years of decreases or no change is the context in which every 2026 renewal is being read.

Those figures are not what employers pay. The Department's release states it directly: "The adopted rate is advisory, meaning that insurance companies are not bound by it and are free to set their own rates." The Commissioner's proposed decision put the industry's average filed manual rate at $2.48 per $100 of payroll as of January 1, 2026, well above the pure premium benchmark, which leaves out insurer expenses, profit and investment return; the same document puts the average rate actually charged in 2025, after schedule credits and other rating-plan adjustments, at about $1.56 (CDI, Proposed Decision, July 7, 2026). Those adjustments are what a carrier's view of your classes and your account turns into. Your premium is your payroll, times your carrier's rate for your classes, times your mod, adjusted by the carrier's schedule credits or debits. The mod is the one factor in that chain that is calculated from your own record under published rules, which is why it is the one worth auditing.

What we do with a rising mod

Our workers' compensation service starts with the worksheet: we pull it, reconcile it to the audits and loss runs, and identify what is an error, what is a reserve conversation with the adjuster, and what is simply the window. We file the inquiry when the facts support one, run the reserve review ahead of each valuation date, and project the next mod before it is published so the renewal is marketed on a projected number rather than a surprise. For employers whose mod reflects real losses, the placement question changes too: some carriers price the past; others price a documented turnaround plan. Our workers' compensation page describes the classification audit and ex-mod analysis in full. To start, request a quote and upload your current declarations page and experience rating worksheet, and tell us the payroll by class.

Sources and verification

Plan rules and figures above were read on October 30, 2026 from the WCIRB's California Workers' Compensation Experience Rating Plan—1995 effective September 1, 2026 (eligibility threshold, experience period, formula, Table II values, revision and dispute rules), the Uniform Statistical Reporting Plan effective September 1, 2026 (valuation and reporting schedule, incurred loss definitions), the WCIRB's online guide pages on the experience rating system, formula, worksheet, ownership, dispute process and Policyholder Ombudsman, WCIRB Bulletins 2026-05, 2026-06 and 2026-11, the Commissioner's decision of May 15, 2026 approving the 2026 plan amendments, the Department of Insurance releases and decision documents of July 15, 2025 and July 7 and 10, 2026 on advisory pure premium rates, Insurance Code section 11753.1, and 10 CCR sections 2509.40 to 2509.46. The frequency illustration is arithmetic from the plan's primary threshold rule, not a WCIRB quotation. Advisory pure premium rates are not the rates insurers charge. This article describes the plan in general terms; the worksheet for your account governs.