How Does Your Current EMR Affect Your Workers' Compensation Costs... - 04/02/2018

Safety E-QuickTips

U.S. Compliance Systems, Inc.

Monday, April 2, 2018

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Safety E-QuickTips is a weekly email designed to help Employers and Employees start their week with a short thought about safety in the workplace.

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How Does Your Current EMR Affect Your Workers' Compensation Costs...

Today we still get asked the question, “Where do I get my Experience Modification Rate (EMR)?” – which leads me to believe that there are still a lot of employers out there that don’t understand how these three words can have a very positive or negative impact on their company's bottom line.

So today I’m going back into our archives to provide everyone a refresher course so you don’t find yourself learning about your EMR the hard way.

Do you understand how your EMR affects your workers' compensation costs and even how it could be used against you when bidding work? If not, you need to learn more about it.

Before we go into the effect your EMR can have on your company, let's look at just what an Experience Modification Rate (EMR) is. This is a term used in the American insurance industry, more specifically in respect to workers' compensation insurance. It is the adjustment of a company's annual premium based on their previous loss experience. When we say loss, we are talking about loss associated with your workers' compensation accident claims.

Usually three years of loss experience are used to determine the experience modifier for a workers' compensation policy, so if you are a new company you would not have an EMR. The EMR is recalculated yearly, always using three years of data. For example, if your policy expired January 1, 2015, your new EMR would be based on data from January 1, 2011 - January 1, 2014. For policies starting in 2016, the data would be used from 2012 - 2015 and so on. The most recent year is excluded.

Who calculates EMR? Rating bureaus, like the National Council on Compensation Insurance, determine EMRs based on insurance information. The calculations take into account past losses of the employer versus other employers in that industry. Other considerations in the calculations include the state in which the employer is located and the size of the company.

Now to the important issues. How does your current EMR affect your workers' compensation costs and how could it be used against you when bidding work?

When it comes to your workers' compensation rates, it's pretty simple. If your EMR is below your industry's average, which is always 1, then your annual workers' compensation premium would be adjusted down accordingly. If your EMR is above your industry's average, then your premium would be adjusted higher. Since workers' compensation rates normally are based on your payrolls, an increase or decrease in your rate could have a dramatic effect on your bottom line.

If your company's EMR gets too high over your industry's average, you could find your company paying additional premiums and possibly participating in a special program designed to help you reduce accidents in the workplace.

Let's talk a little about how your EMR could affect your ability to bid on certain work.

Today, more than ever, companies, general contractors, and construction managers are requiring suppliers and service providers to complete bidder qualification forms before being considered for future work. As part of the bidder's qualification form, suppliers and service providers are being asked to provide their current EMR and even their past three years of EMRs. After completing the bidder's qualification forms, some companies with higher than average EMRs are not permitted to bid on work until their rate is lowered. Because an EMR is only reviewed annually, these companies are finding they are not able to bid on work for certain clients for years and sometimes never.

So now you know why it is important to know what your company's EMR is. If you don't already know your company's EMR, check with your workers' compensation carrier. By knowing what it is, making sure the information used to determine it is correct, and working to keep it as low as possible, you will go a long way in protecting your company's most valuable assets - employees, reputation and profits. 

Have you have just received your first Safety E-QuickTip or just want to take a look at past issues, check out our Safety E-QuickTips Archive Page on our website.

If you know of someone or a company that might benefit from receiving Safety E-QuickTips, please take a moment to share this with them so they can sign-up today.

Thanks for Reading and Please - Work Safe This Week!

Contact Information

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U.S. Compliance Systems, Inc.
Phone: 1-888-475-5353
Fax: 1-888-925-5353
Website: www.uscompliancesystems.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Receive Safety E-Quick Tips First Thing Monday Morning 4:30 EST

Quick Links...
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Customized Online Safety Programs
Online 1 Hour Safety Training
Workplace Safety Posters

If you have just received your first Safety E-QuickTip or just want to take a look at past issues, check out our Safety E-QuickTips Archive Page on our website.

If you know of someone or a company that might benefit from receiving Safety E-QuickTips, please take a moment to share this with them so they can sign-up today.

Thanks for Reading and Please - Work Safe This Week!

Contact Information

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

U.S. Compliance Systems, Inc.
Phone: 1-888-475-5353
Fax: 1-888-925-5353
Website: www.uscompliancesystems.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Receive Safety E-Quick Tips First Thing Monday Morning 4:30 EST

Quick Links...
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Customized Online Safety Programs
Online 1 Hour Safety Training
Workplace Safety Posters