Experience Modification Ratings, or X-mods, are state-assigned, insured-specific figures used to reward or penalize insureds for their loss history in relation to their payroll. Insureds with lower, less-severe claims than other companies in their industry tend to receive lower X-mods, while insureds with more frequent and severe claims tend to have higher X-mods. The idea is to encourage better business practices that lead to safer workplaces and lower levels of risk.
As you can see in the following charts, the distributions of risk counts and premium by X-mod share the characteristics of being bell-shaped, slightly right-skewed, and balanced just below 1, though you can also see that premium tends to be distributed more evenly than the risk counts are. This is due to the fact that insureds in the tail sections tend to be larger in size with more credible experience.
It is also notable that extremely high X-mods are rather rare, no matter what state the insured is in. It is much more common for a given X-mod to fall near to or slightly less than 1.
EXPERIENCE RATING DISTRIBUTION BY STATE
(as of 10/20/2020)