What is an EMR Rating or EMR Score?
An EMR or experience modification rating, sometimes called a MOD rating, helps determine the price of worker compensation insurance premiums.
Your EMR is used almost like a credit score– meaning insurance or third-party companies use this score to determine what your potential for risk in the future might be. For construction, insurance companies use this score to understand your past cost of injuries and fatalities to determine your risk level and premiums.
What is a good EMR Rating or EMR score?
The average EMR score is 1.0. That means your company is no more or no less of a risk than other companies. When your score drops below 1.0, you are considered safer than others in the industry. Low scores often mean lower premiums, making attention to your EMR score significant.
As a general contractor, your EMR score is essential. Many owners have EMR criteria or pre-qualification rules for their projects, choosing to work only with contractors with an EMR below 1.0.
When your EMR score goes above 1.0, you are considered riskier than other companies. This can affect your bidding on projects and your workforce retention.
“An EMR of 1.2, for example, can mean that your insurance premiums could be up to 20% higher than a company with an EMR of 1.0, and that 20% difference must be passed on to clients in the form of increase bid prices.” – Triax
Calculating your EMR
Insurance and workers’ compensation claims reported to the National Council on Compensation Insurance (NCCI) from the last five years determine your EMR Rating or EMR Score.
Keep in mind, insurance companies use claim info from only the three years prior. So if you’re policy is due to renew in 2021, for example, the insurance company will look at your claims from 2016, 2017, and 2018.
Each claim in that timefram is then analyzed under a deeply involved EMR worksheet that considers circumstances such as incident types and financial value of claims paid out. The size of your payroll also will affect your EMR score or EMR rating.
How to lower your EMR score or EMR rating
Companies can lower their EMR score or EMR rating, and thus reduce their premiums, first and foremost with improved safety training and process. Safer work sites reduce the amount of claims submitted, as it lessens the potential and risk for injuries from common worksite hazards.