"EMR" stands for the "Experience Modification Rate" and is a number used by worker compensation insurers to determine the premium price for a company. Additionally -- and this is where employees might want to take notice -- a company's EMR is often requested during contract bidding. If a company's EMR is too high (over 1.0), they will be unable to bid or will be at a significant disadvantage against companies that have EMRs less than 1.0. No bidding means fewer contracts, resulting in less work, and ultimately fewer employees.
Calculating Insurance Premiums
A company's insurance premium is calculated by applying a base rate to each $100 of payroll in any given class code. Base rates are set by the insurance company and reflect the inherent risk in that job classification. As an example, the base rate for roofers is higher than that for office clerks because the risk of injury and the severity of most injuries sustained by roofers is greater than for clerks. After the base rate has been applied to the payroll, the entire premium is modified by the EMR.
Calculating the EMR
To calculate the EMR that the insurance company applies to the premium, the National Council on Compensation Insurance (NCCI) compares your claims of injury to those from companies in similar occupations. Some states have separate ratings calculated by state specific rating bureaus, but NCCI calculates the ratings for most states. If your claims are higher or more severe than those of other companies of similar size and operations, your EMR will be higher and you will pay an elevated premium. If they are less, the company will pay a reduced premium. Rates are higher if you have many small injuries than if you have one severe injury. Having many injuries usually indicates an inadequate safety culture and will usually lead to a severe injury. Keep in mind that the EMR is a 3-year average, so any injury claim will affect the company EMR for that period of time.
What to Do to Stay Competitive
Staying competitive requires commitment and action by both company management and employees.
- Companies need to verify that their employees are placed in the correct job classifications for what they actually do.
- Management needs to institute a strong safety culture from the top down.
- Employees need to pay attention to company expectations and their surroundings so they are not injured on the job.
Important Note to Employees
If you sustain an injury, follow the rules on reporting to minimize your pain and suffering and to maximize your opportunity for a speedy return to work.
If you have questions about this information or need assistance for your company, facility, or project, please feel free to contact us.