The Experience Modification Rating (EMR) is a number-based appraisal of a business’s risk regarding historical safety performance and workers’ compensation insurance claims. The average EMR for a business is 1.0 while the “best” rating is around .5 and the worst being between 2.0 and 3.0.
A rating higher than 1.0 indicates that the business has more risk based on the actual losses incurred versus the expected losses based on an industrial average over an annualized period.
A higher EMR number will result in higher insurance premiums. A business with 1.0 or lower EMR will have lower insurance premiums and be seen as low risk.
35 states plus the District of Columbia use the (National Council on Compensation Insurance) to determine the EMR of a company.
To calculate the EMR rating, a company’s actual losses (insurance claims) are compared to its expected losses based on real information and actual insurance claim history within the industry in question.
Insurance agencies will examine the past 3 years of claims that have been reported to the NCCI when calculating the EMR rate.
EMR = Actual incurred loss / Expected loss
Example – Incurred loss of $100,000 with an industry average of $80,000:
$100.000 / $80,000 = an EMR of 1.25
Tips on how to improve your company’s EMR
Implement a compliant Company Safety Program
Develop comprehensive safety policies and procedures specifically for every operation and hazardous activity occurring in your workplace.
Form a Safety Committee with both management and employees working together
Discuss and evaluate known safety events, common concerns or frequent incidents.
Learn from past incidents to create solutions to prevent recurrence.
Create goals and objectives designed toward eliminating incidents not reducing them.
Reward safe behavior in a compliant manner.
Provide appropriate Personal Protective Equipment (PPE) for each job specific task or duty.
Provide safety training often and anytime there has been a change in the workplace that can affect the employees.
Perform regular workplace inspections to discover all hazards and work toward solutions.
Work toward continuous improvement in both safety and operations.
Invest in technology to improve processes and management oversight; there are several companies which provide comprehensive safety program solutions along with modern technology to help with implementation and management.
Using the EMR is becoming more common when vetting contractors or companies bidding on jobs – make sure you are examining your contractors’ EMR ratings when obtaining their Certificates of Insurance.
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