Experience Modification Rate for Workers’ Compensation InsuranceApril 20, 2022 12:00 pm
Worried about the cost of workers’ compensation insurance? Make sure and ask about the experience modification rate (EMR). The EMR is a way for safe workplaces to get a discount on their workers’ compensation coverage.
The EMR is a multiplying factor that reflects a company’s claim history. The safer your workplace, and the fewer workers’ compensation claims for the company, the better the EMR. If your EMR is better than average, your workers’ compensation premium should be lower than average.
Of course, the EMR works both ways. If your claim history is above average, your workers’ compensation premiums will be higher than average. The theory is that your history of losses is the best predictor of future losses.
In 39 states, the National Council on Compensation Insurance (NCCI) determines the class rate, which is the potential risk factor for particular classes of industries. Individual state agencies determine the class rate in the other 11 states. The industry average for each industry is placed at a 1.0. If your business is ranked lower than 1.0, then your premium costs should be lower.
Workers’ compensation rates are calculated by industry. Insurance companies determine your ranking by comparing your company’s performance for the last three years to other companies in the same industry. Your company gets that rating for three years. To compare performance, the insurer looks at overall safety performance as well as the number of workers’ compensation claims. Because they also look at the size of the company, incidents have a greater impact on rates for small companies than larger companies.
The best way to lower your EMR is to improve workplace safety. According to the Occupational Safety and Health Administration (OSHA), a workplace safety program can reduce workplace accidents and injuries. Reducing the number of incidents is the first way to decrease your EMR. In addition, insurers may look at whether you have a workplace safety program when determining your EMR.
Want to find out more about workers’ compensation insurance? Contact Capstone Coverage. Our independent insurance agents can help you calculate your EMR. Then, we can help you compare costs and coverage from various insurers, based on the EMR for your company. If your EMR is not in your desired range, we can also help you discuss strategies that you can implement to help lower your EMR for your next three-year coverage period.
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This post was written by Capstone Coverage