The Experience Mod's Effect on your Workers Comp Premium

We discussed how to calculate your Experience Mod in an earlier post, now we will discuss how to reduce your premium by focusing on your Experience Mod:

What is an Experience Modification Rate (EMR)?

The experience modification rate (EMR) is a number that represents a company's history of workers' compensation claims and their safety record. This rate is calculated by the National Council on Compensation Insurance (NCCI) based on the company's workers' compensation claims experience over a three-year period.

How Does EMR Affect Workers' Compensation Premiums?

Insurance carriers use a company's EMR to determine their workers' compensation premium. A high EMR indicates that the company has a history of workers' compensation claims, which increases the risk of future claims and raises the cost of insurance premiums. A low EMR indicates that the company has a good safety record and a lower risk of future claims, which can result in lower insurance costs.

How Can Companies Reduce Their EMR?

There are several steps that companies can take to reduce their EMR and lower their workers' compensation premiums. These include:

1. Implementing Safety Programs: Implementing safety programs and training employees on safe work practices can help prevent workplace injuries and reduce the number of workers' compensation claims.

2. Developing a Return-to-Work Program: Developing a return-to-work program can help injured employees return to work as quickly and safely as possible, reducing the duration and cost of workers' compensation claims.

3. Reporting Claims Promptly: Reporting workers' compensation claims promptly can help ensure that they are handled promptly and effectively, minimizing the potential impact on the company's EMR.

4. Working with a Knowledgeable Insurance Broker: Working with a knowledgeable insurance broker can help companies identify opportunities to reduce their EMR and lower their workers' compensation premiums.

In conclusion, a company's experience modification rate (EMR) is an important factor that affects their workers' compensation premium. A high EMR indicates a history of workers' compensation claims and a higher risk of future claims, resulting in higher insurance costs. A low EMR indicates a good safety record and a lower risk of future claims, resulting in lower insurance costs. By implementing safety programs, developing a return-to-work program, reporting claims promptly, and working with a knowledgeable insurance broker, companies can reduce their EMR and lower their workers' compensation premiums.

How Your Experience Mod is Calculated

A company's experience modification rate (EMR) is a number that reflects their history of workers' compensation claims and their safety record. It is used by insurance carriers to calculate the company's workers' compensation premium. Here's a closer look at the formula used to determine a company's experience modification rate:

The Formula for Calculating EMR:

The formula used to calculate a company's experience modification rate (EMR) is based on the following factors:

Actual Losses: The actual losses incurred by the company in the most recent three-year period.

Expected Losses: The expected losses for the industry based on the size of the company and the type of work performed.

Experience Rating Adjustment Factor: This factor adjusts the EMR to reflect the size of the company's payroll and the degree to which it differs from the average payroll for the industry.

The formula for calculating the EMR is:

EMR = Actual Losses / Expected Losses x Experience Rating Adjustment Factor

For example, if a company's actual losses over the most recent three-year period are $100,000, and the expected losses for the industry for that period are $50,000, the company's loss ratio would be 2.0. If the experience rating adjustment factor is 1.0, the company's EMR would be 2.0. This means that the company's workers' compensation premium would be twice the amount of a company with a 1.0 EMR.

To put it simply, an EMR is a number that compares your Workers Comp experience to ‘average.’ A number above 1 is worse than average and a number below 1 is better than average. Your Workers Comp premium is multiplied by that number, so it has a direct effect on the premium you pay. Companies can improve their EMR by implementing safety programs, developing a return-to-work program, reporting claims promptly, and working with a knowledgeable insurance broker. By reducing their actual losses and improving their safety record, companies can reduce their EMR and lower their workers' compensation premiums.

Navigating Workplace Injuries: A Guide for Companies to Respond and Recover

Workplace injuries are unfortunate yet often unavoidable occurrences in the business world. A timely, well-coordinated response to such incidents can minimize their impact and ensure the wellbeing of your employees. Here's a step-by-step guide for companies on handling workplace injuries, from immediate actions to long-term strategies.

Immediate Medical Attention

The first and foremost priority when a workplace injury occurs is the immediate well-being of the injured employee. Ensure that the employee receives prompt medical attention. Depending on the severity of the injury, this could range from administering first aid to calling for an ambulance.

Secure the Area

Once the injured individual is cared for, secure the accident site. This is crucial to prevent any further injuries and to preserve the scene for investigation.

Document the Incident

Accurate documentation is essential when dealing with workplace injuries. Record every detail of the incident, including the date, time, location, people involved, and any witnesses. Capture photographs of the accident scene if possible. This will assist in any subsequent investigations and can be important for insurance claims.

Notify the Relevant Parties

Inform the appropriate parties about the incident as soon as possible. This includes your HR department, management, and your insurance broker or carrier. Depending on your jurisdiction and the nature of the incident, you may also need to report the injury to a local or national health and safety regulator.

Commence Investigation

An internal investigation should begin promptly to understand the cause of the accident. This can help you identify any workplace hazards or operational issues that need to be addressed to prevent similar incidents.

Support Your Employee

Provide ongoing support to your injured employee. This could include assisting with their insurance claim, providing necessary time off, arranging for therapy if needed, and developing a return-to-work plan when they are ready.

Review and Improve Safety Measures

Following the investigation, review your workplace safety protocols. The incident may highlight areas that require improvement. Invest in staff training, update safety equipment, or revise operational procedures as necessary.

Communication

Transparent communication is key following a workplace injury. Keep your employees informed about what happened, how the company responded, and what steps are being taken to prevent similar incidents. This can alleviate anxiety and build trust within your team.

While workplace injuries are challenging, they also provide opportunities for growth and improvement. By handling these incidents with care and efficiency, your company can enhance its safety measures, strengthen its operations, and foster a culture of safety and respect. Remember, your insurance broker is a valuable partner in this journey, providing guidance and support along the way.