Experience modification rate

What IS the company s Experience Modification Rate with respect to worker s compensation for the last three years ... 

Provide employee accident experience for the past 5 years, including the current year. The submittal shall specifically include OSHA recordable cases rate, lost and restricted workday cases rate, vehicle accident rate, and number of fatalities with a description of each. The workers compensation interstate experience modification rate should be less than 1.0, and applicable SIC codes should be noted. 

NOTE Contractors unable to meet host organization requirements for accident rates or experience modification rates may submit a written safety enhancement program designed to bring project performance in line with host organization requirements which will be implemented for all work done for the host organization. If approved by the host organization health and safety professional, the safety enhancement plan will become part of the contractor s job-specific safety plan and the contractor may be approved. 

Our excellent safety performance over the past seven years has been a key factor in reducing our insurance cost. Our low EMR [Experience Modification Rate], incidents rates, and SHARP Management System have impressed our customers and, in many cases, was a key factor in selecting Parsons to perform their project. 

Knowledge as to a contractor s performance can be provided by their insurance company. They calculate an experience modification rate (EMR) for the previous 3 years. It is the ratio of the Actual Workers Compensation Losses to the Expected Workers Compensation Losses. ... 

The workers compensation experience modification rating system is based on actuarial science. In an undated publication titled The ABC S of Experience Rating issued by the National Council on Compensation Insurance, these statements appear. 

Note that some states have requirements for an I2P2-like program. Depending on the state, these programs apply to all employers, employers above or below a certain size, employers with injury and illness rates above the industry average, employers in high-hazard industries, or employers with above-average workers comp experience modification rates. 

One such method for determining workers compensation premiums is through the use of the experience modification rating (EMR). The EMR is determined by the National Council on Compensation Insurance (NCCI) or other insurance rating groups. The EMR system rates companies based upon the type of work they are engaged in and their past loss history. Using actuary science, the insurer estimates what a firm s losses should have been over a period of time and compares them to their actual losses (Adams 1997,33). 

The insurance loss experience for an organization is closely related to its safety performance. An understanding of how insurance premiums are calculated and the type of impact accidents can have upon premiums can provide the safety manager with an additional method for measuring safety performance. Along with measures of lost workdays and recordable accidents, insurance industry measures should also be part of the safety performance measurement and improvement process. Examples of quantifiable insurance markers that are indicative of safety performance are loss ratios, experience modification rates, and expense ratios. These insurance industry measures are yet another type of performance measure available to the safety professional. 

Rouse, William B. Factors of the experience modification rating and why they mean. Professional Safety. 42(9) 27-29. 

Experience modification rates for workers compensation insurance... 

Each workers compensation claim is either directly or indirectly a drain on the profit margin of the company. This is the primary business reason to track workers compensation claims. Many employers who have a less than stellar experience modification rate (EMR) may have difficulty in procuring work, or bidding on work, when perspective buyers assess their safety and health performance. 

Implementing an effective safety program to reduce work site incidents can influence workers compensation premium costs. Lowering the frequency and severity of construction accidents will help to lower experience modification rates (EMR) and manual rates that, in turn, lower workers compensation insurance premiums [3,7]. 

Beyond these broad outlines, each organization can devise any system that seems right for them. The dollar criterion is included because of the belief that a dollar measuring stick is much more meaningful to employees than any safety measuring stick (such as the frequency, severity rates, and/or experience modification rate [EMR]) [2, 3]. 

Now, do some wild speculation and consider whether the following example begins to have credibility. An employer has 500 employees who work I million hours a year. Do the OSHA statistics, the recordable case rate and the lost-workday case rate, for an exposure of I million hours begin to achieve a reasonable confidence level as measures of the quality of safety performance Perhaps somewhat, but additional performance measures are needed. An entity of this size would more than likely purchase workers compensation insurance. Cost trending and the trending of the company s experience modification rate serve as additional measures. 

Workers compensation can be a sensitive issue. This simple phrase might elicit skepticism becanse of the ambnlance-chasing attorney commercials on television and the stories of frand that make the headlines. Nothing good or productive can come from experiencing a workers compensation claim. Claims can be incredibly expensive. They can drain the time of staff, particularly if the injured employee is represented by an attorney. A school s injury rate and its insurance experience modification rate increase. Administration might be skeptical of the legitimacy of a claim each time a subsequent injnry is reported. The injured employee can suffer physically, emotionally, and financially. Simply, it is bad for everyone involved. 

Using selected data such as reduction of the total case incident rate (TCIR), or workers compensation experience modification rate (EMR), etc. does not add value to an organization, as described in Lesson Learned 3. 

X 200,000 / 100,000 work hours = 4.0 Recordable Cases Incidence Rate = 4.0 Experience Modification Rates (EMR)... 

Experience modification rates are multipliers used in most states workers compensation formulas. The rates are based on worker injury/illness loss history over a three year period (the first three of the last four years) and can drive workers compensation insurance costs up or down depending on the amount of loss that occurred over the three year period. An EMR of 1.0 is considered to be average. An EMR over 1.0 will increase the base premium. An EMR below 1.0 will result in a reduction to the base premium. Contractors should contact their workers compensation insurance carriers to obtain current and past EMRs. 

Once the challenge of locating accurate and complete records is met, the task of trend determination can begin. One of these key trends might be the accident incidence rate both for lost workday and recordable incidents. Another key trend that could probably be determined is the Experience Modification Rate (EMR). One should be able to obtain this number from the workers compensation carrier. The workers compensation carrier probably has already made a determination of which claims the most money has been expended on, which claims included the most days away from work, which parts of the body were affected most of the time, and so on. Getting information from the workers compensation carrier can be another good source of information. 

Prequalification and selection can range from a simple review of performance data to a comprehensive review of both performance and safety programs. The simplest approach is to request the company s workers compensation Experience Modification Rating (EMR) issued by the company s insurer for the last 3 to 5 years. An EMR of 1.0 is the average for the industry 0.5 is half the industry average, and 2.0 is twice the industry average. More extensive safety information submittals may include any of the examples outlined in Table 5-1. 

Safety performance Experience Modification Rating (EMR) Recordable injury/illness information (e.g., OSHA 300A summaries) Number of hours worked number of OSHA-recordable injuries/illnesses number of fatalities number of lost workday (LWD) cases Recordable or LWD incidence rates (no. recordable or LWD cases x 200,000/ employee hours worked) List of OSHA notices of violation and fines Safety/health-related judgments, claims, contract terminations, or pending/ outstanding lawsuits... 

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