Understanding Experience Modifier Rates

If you own or manage a workplace, you’ve likely heard the term Experience Modifier Rate (EMR) when dealing with workers’ compensation insurance. But what exactly does it mean, and why should you care?

What Is an Experience Modifier Rate?

EMR is a number used by insurance companies to assess your risk level compared to similar businesses. It’s similar to the credit rating system lenders use in granting loans and setting interest rates.

An EMR and a credit score are ways of quantifying different types of risks. It’s based on your facility’s past workplace injuries and claims history. The industry average EMR is rated as a 1.0.

If your EMR is lower than a 1.0, then your safety is better than industry average and your insurance rates will be lower. If your EMR is higher, it means the frequency and severity of incidents is higher than average in your workplace, and you will have to pay more.

How Is an EMR Calculated?

Calculating an EMR is complicated, as the rules and metrics are different in each state. That’s why an insurance company has specialists who analyze workers’ comp claims, actual losses, and loss rates to crunch these numbers. Insurance providers look at:

• Your company’s actual losses (your workplace injuries and claims).
• Payroll data.
• Expected losses (the average for your industry).
• Claim frequency and severity (more frequent and severe claims increase EMR).

Why Does EMR Matter?

• Affects insurance costs: a higher EMR means higher workers’ comp premiums.
• Impacts business opportunities: many clients and contractors prefer to work with businesses that have a low EMR, as it signals strong safety practices.
• Reflects workplace safety: a lower EMR shows your commitment to employee safety and risk management.

How Do I Find My EMR Rating?

Not sure what your current EMR is? You can find it in two places:

• On the Declarations page of your company’s workers’ compensation policy.
• By contacting your dedicated insurance agent.

How Can I Improve My EMR?

1. Build safety programs and prioritize safety training: educate employees on safe work practices.
2. Keep the workplace clean: housekeeping is the basis for a good health and safety program. Removing obstructions and clutter lowers the risk of slip, trip, and fall incidents.
3. Get the right equipment: if employees have to use inadequate equipment, the risk of an injury rises.
4. Address repetitive tasks: repetitive tasks increase the risk of ergonomic injuries. Having the right workstation setup can drastically reduce the risk.
5. Reward safe behavior: what gets recognized gets repeated.
6. Hire employees with a safety mindset: build a team of people who will be their brother’s keeper. (This one takes time, but it’s worth it.)
7. Investigate and address incidents quickly: place a high importance on reporting near misses, and correct the causes contributing to the incidents. Investigate the incidents quickly before the conditions change and people forget.
8. Implement a return-to-work program: the longer a worker is out of work, the harder it is for them to return. Once a worker is released to return to work, even on light duty, find a way to bring them back.

Final Thoughts

Understanding and managing your EMR will reduce injuries, lower cost, and increase employee retention. By focusing on workplace safety and having a proactive safety mindset, you can give your business a competitive edge.

How Can Walden Help?

The safety professionals at Walden are available to help your company create an initial written safety program, complete risk assessments, perform inspections, and train your team. We can also conduct a gap analysis of your existing safety programs to ensure they are effective in protecting employees and reducing costs. If you need assistance, please contact Walden EHS Director, David Garner, at 860-846-4069 or dgarner@walden-associates.com for further support.