What is an EMR (Experience Modification Rating)?
Experience Modification Rating (EMR) is a critical metric in determining the cost of your workers’ compensation insurance. Think of it as a report card for your business’s workplace safety performance. It compares your workers’ compensation claims history to the industry average for businesses of similar size and type.
The EMR is expressed as a numerical value:
- An EMR of 1.0 means your claims history is average for your industry.
- An EMR below 1.0 indicates better-than-average performance, leading to lower workers’ comp premiums.
- An EMR above 1.0 suggests a higher-than-average claims history, which increases your premiums.
For example, if your EMR is 1.25, your workers’ comp premium will be 25% higher than the industry average. On the flip side, an EMR of 0.85 would result in a 15% discount on your premium.
Why Your EMR Matters
Your EMR isn’t just about insurance premiums; it reflects your workplace safety and operational efficiency. Here’s why keeping your EMR low is important:
- Cost Control: A higher EMR increases workers’ compensation premiums, potentially costing your business thousands of dollars annually.
- Competitiveness: Many contracts, particularly in industries like construction, require businesses to maintain an EMR below a certain threshold (often 1.0). A high EMR can disqualify you from lucrative projects.
- Reputation: A high EMR may raise red flags with clients, partners, or regulators, signaling potential safety concerns.
- Risk Management: A low EMR reflects a safer work environment, leading to higher employee morale and productivity while reducing turnover.
Common Factors That Impact Your EMR
Several factors can influence your EMR, some of which are within your control:
- Claims Handling: Open or unresolved claims can artificially inflate your EMR. Resolving claims promptly and efficiently helps keep your EMR in check.
- Safety Programs: A robust workplace safety program can prevent accidents and injuries, directly reducing claims frequency.
- Payroll Classifications: Incorrect classifications can lead to higher premiums. Regular audits can ensure your employees are properly categorized.
- Frequency of Small Claims: A pattern of minor incidents can weigh heavily on your EMR. Encouraging a culture of safety can reduce these occurrences.
High EMRs and Code Rule Violations
A high EMR triggers code rule violation (ICR-59). ICR-59 is a New York State regulation that mandates workplace safety audits for businesses meeting two criteria: an Experience Modification Rating (EMR) above 1.2 and annual payroll exceeding $800,000. These criteria suggest a higher-than-average risk of workplace safety issues. Understanding ICR 59 Violations And what it means for your business
How We Can Help You Reduce Your EMR
Managing your EMR effectively requires a strategic approach, and that’s where Navigator Risk Management comes in. We specialize in identifying the root causes behind high EMRs and providing risk management solutions to lower them.