Workers comp EMR: what it is and how it affects your cost

What a workers comp EMR is

Your workers comp EMR, short for experience modification rate, is a number that adjusts your premium based on your own claims history. It compares the claims your business actually had with the claims expected for a business with the same payroll in the same job classes.

You may also hear it called an experience mod, e-mod, mod factor, or x-mod in California. They all mean the same thing. A rating bureau calculates it, not your insurer. NCCI does this in most states, and a few states have their own bureau.

• 1.00 means your claims are about average for your kind of business.
• Below 1.00 means better than average, so you get a credit.
• Above 1.00 means worse than average, so you pay a surcharge.

How your EMR changes what you pay

Your insurer multiplies your premium for that state by your EMR. Take a business with $50,000 of premium before the EMR is applied:

• EMR of 0.75: you pay $37,500, a savings of $12,500.
• EMR of 1.00: you pay $50,000.
• EMR of 1.30: you pay $65,000, an extra $15,000.
• Because the EMR uses about three years of claims, one bad year can raise your cost for three renewals in a row.

Who gets an EMR

Experience rating is required once your business pays enough workers comp premium. You cannot opt in or out, and your insurer must use the EMR the bureau issues. Each state sets its own threshold. Businesses below it have no EMR, which works the same as a 1.00.

A new business also starts with no EMR. Once it has enough payroll and claims history to meet the threshold, the bureau calculates one. Our guide on how the EMR is calculated by state lists example thresholds and the rating bureau for each state.

What goes into your EMR

The bureau uses the payroll and claim data your insurers report. For most businesses, that covers about three policy years. The year that just ended is left out because its claims are too new to value.

• Payroll by class code, which sets your expected losses.
• Every claim in those years, including money the insurer has set aside (reserves) for open claims.
• Each claim is capped at a state limit, so one huge claim cannot push the EMR without end.
• In most NCCI states, only 30% of a medical-only claim counts.
• Many small claims usually hurt more than one large claim, because the first part of every claim counts in full.

What is a good EMR

Any EMR below 1.00 is better than average and lowers your premium. Customers and general contractors who check EMRs commonly look for 1.00 or lower. An EMR above 1.00 means you are paying extra, and the higher it goes, the more it costs.

Keep in mind that small businesses can see their EMR swing a lot from one claim, while large businesses' EMRs mostly reflect their own record. NCCI has cautioned that the EMR was built to price insurance, not to grade safety, so it works best as one sign among several.

Why contractors get asked for their EMR

Many general contractors, property owners, and public agencies ask for your EMR on bid and safety prequalification forms. Some set a top EMR they will accept. A high EMR can cost you jobs, not just premium.

When asked, give your current EMR from the rating bureau's notice or your insurer's mod letter, and keep the last three years on hand. If your EMR is high because of one claim that is now closed, a short note on what you changed can help.

How to find your EMR

Ask your agent or insurer for your current EMR and the experience rating worksheet behind it. NCCI sends each new EMR to your insurer and, in some states, directly to you. Some bureaus also offer lookups. In California, licensed agents can check x-mods through the WCIRB, and the Massachusetts bureau has an experience rating history search.

Your EMR is usually updated once a year and takes effect on your rating date, which is often your policy renewal date. Ask for the new worksheet 60 to 90 days before renewal so you have time to fix mistakes.

How to lower your EMR

Your EMR goes down when you have fewer and smaller claims over the years that count. These steps help most:

• Prevent the most common injuries first. A written safety program and OSHA's free on-site consultation help small businesses.
• Report every injury to your insurer the same day. Late reports tend to cost more.
• Offer light or modified work so a claim can stay medical-only.
• Ask your insurer to close finished claims and review reserves that look too high before data goes to the bureau.
• Make sure every employee is in the right class code. Wrong codes can make your expected losses too low.
• Check your worksheet every year for claims that are not yours, wrong payroll, or old reserves.

Mistakes that raise your EMR

These are the patterns that most often push an EMR above 1.00:

• Waiting days or weeks to report an injury.
• Sending injured workers home with no contact and no light work offer.
• Never reviewing the worksheet, so errors stay for three years.
• Ignoring small, frequent injuries because each one seems cheap.
• Thinking a new insurer or a new company name will reset the EMR. It will not.

Common questions about workers comp EMR

Does changing insurers reset my EMR? No. The bureau uses data from all your insurers, so the EMR follows your business.

Does a new owner or new company name reset it? Usually not. Ownership change rules decide whether the old experience moves to the new business. Under NCCI rules you must tell your insurer in writing within 90 days of an ownership change.

How long does a claim affect my EMR? About three years, starting a year or more after the injury.

Can I get an EMR fixed? Yes, if it is based on wrong data. Your insurer must send corrected data to the bureau. Each bureau also has a dispute process, and appeals usually end at the state insurance department.

Is the EMR the same in every state? No. Some states use their own rating plan, and businesses in several NCCI states may get one interstate EMR. See our guide on how the EMR is calculated by state.