What is an Experience Modification Rating (EMR Rating)?

An EMR is a way for insurance carriers to adjust their workers’ compensation insurance premiums, based on the expected losses from workers’ compensation claims for each company they insure.

It’s similar to the credit rating system lenders use in granting loans and setting interest rates. An Experience Modification Rating and a credit score are ways of quantifying different types of risks.

Businesses with good safety records will see this reflected in a low EMR number, which translates into lower premiums for their workers’ compensation coverage.

Many small business owners probably don’t need to worry about their EMR, as it only applies to workers’ comp premiums of at least $5,000 per year.

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 for their brokers.

The formula may involve your payroll data, claims history, and an industry risk factor, such as the National Council on Compensation Insurance (NCCI) classification codes, although many states have their own classification methods and class codes.

The average EMR is 1.0 which means a business is no more or less risky than similar businesses in their profession. A rating higher than this would mean a business is riskier than average and would result in higher premiums.

If your EMR is 1.2, insurance agencies would raise your premiums by 20 percent, because your business is considered a higher risk. An EMR of 0.8 would reduce your premiums by 20 percent, so a lower EMR can save you money on premiums.

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 or by contacting your dedicated insurance agent.

The steps that help lower your EMR number also help you reduce claims and save money on workers’ comp premiums. That’s why spending time and money to improve employee safety at your business is a good investment.

If you reduce your loss experience with workers’ comp, resulting in a lower EMR, insurance agencies will view this favorably when setting your new workers’ comp rates at the start of your next policy period.

Here are a few tips to help reduce your EMR score...

Building safety programs with written instructions for the tasks your employees routinely perform. Use employee safety programs, retraining, and offer continuous reminders on the importance of safety.

The Occupational Safety and Health Administration (OSHA) offers training requirements and resources for multiple occupations, including safety classes.

Proper signage can warn employees of potential hazards, whether it’s a wet and slippery floor or a high-voltage electrical panel. OSHA offers information on the types of signs it requires.

Equip your employees with the equipment they need and make sure they use it. This means more than owning safety glasses and other personal protective equipment (PPE). Make sure your safety equipment is kept in proper working order and that employees know how to use it correctly.

Establish methods to alleviate the strain of repetitive actions, such as ergonomic office equipment that can reduce the chance of carpal tunnel syndrome. Industry associations within your field can also offer advice on what you need.

Workspaces, hallways, entryways, and emergency exits should be clean and clear of obstructions and clutter.

Have a course of action for handling and reporting employee injuries and emergencies. This should include emergency contact information for first responders. Make sure this information is part of your safety education program.

Offer perks to those who follow the safety rules. Rewards like gift cards, bonuses, and free lunches can remind employees of the importance of safety.

Complete Insureon’s easy online application today to get insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance needs. Once you find the right insurance policy for your small business, you can begin coverage in less than 24 hours.