If you have spent any time working in the insurance industry, you know that each state has its own regulatory quirks. However, when it comes to the distribution of both premium volume and risk count by X-mod, there are some definite similarities. Experience Modification Ratings, or X-mods, are modification factors based on a state’s assessment of the loss history of a specific insured. X-mods are meant to reward companies that better prevent workplace injuries or penalize and encourage changes with employers with poorer loss histories.

If you look at the distributions on the following pages, you will notice there is the common shape of a bell curve with a slight right skew. The bell shape of the risk count distributions is due to the fact that it is far more common for an insured to have an X-mod near to or just below 1 than it is to have an X-mod toward the fringes, which also causes the premium volume to pool near 1 as well. However, because insurance companies want to compensate for the extra risk that comes with more extreme X-mods, there is a higher level of premium toward the edges of that distribution, causing a flatter bell curve for premium volume than for risk count.

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