Your experience modification rate, or EMR, is about more than your company’s annual insurance costs. Most don’t even know what their EMR is…. But coming to know EMRs a bit better could protect your reputation, and will definitely protect your bottom line.
What does your EMR really mean?
Your EMR is a numeric representation of your business’ claims history and safety record compared to others in your industry, within the same state of operation.
Breaking down the numbers:
- >1 – Your company is riskier than average.
- =1 – Your company is no more/less risky than others.
- <1 – Your company is safer than average.
How is EMR calculated?
The most basic breakdown of your EMR is ACTUAL CLAIMS ÷ EXPECTED CLAIMS. But true calculations are much more complex. Agencies also factor in past data reported to the National Council on Compensation Insurance, as well as additional data from NCCI’s EMR worksheet. Most important are amount(s) and type(s) of incident(s), and money paid out as a result.
How This Affects Your Premium
Combined with other factors such as job code and payroll, if your calculated EMR was 1.25, you’d pay 25% more for workers comp premiums than other companies in your sector. If it’s lower, 0.80, you’d pay 20% less on average.
How Can I Lower it?
In a word: Safety. Instilling a ‘culture of safety,’ beginning with a realistic safety plan containing actionable steps for improvement, such as on-the-job safety training and PPE, is necessary to reduce incidents, thus lowering your EMR over time.
Ready to lower those experience modification rates? The workers comp insurance consultants at Minnesota Comp Advisor are here to help.