Experience Mod. Rating (EMR) – Quickly Explained

Many Employers have a Jan 1 renewal date – so this seems like a good time to Post.

If you are an Employer with Work Comp coverage and of a certain size (in MO with a premium of $3,500 or more per year), you are subject to an Experience Modification Rating (EMR – also referred to as The Mod.).

A simple but useful explanation:

• As an Employer you are expected to have a certain amount of paid work related injury claims during a policy year

• If Claims are less than expected, your EMR will be a credit – when applied, it will lower your annual premium

• If Claims are greater than expected, your EMR will be a Premium Debit (this will increase your premium)

How is it determined what an Employer would be expected to pay in claims during the policy term:

• The type of business you operate (e.g. a Contractor is expected to have a higher volume of work related injuries than a CPA’s office)

• Your estimated annual payroll – Example: Employers with large payrolls are naturally expected to have a higher likelihood of work related injuries since the higher payroll indicates more employees and more hours worked than an Employer with significantly less payroll.  

• A large amount of expected claims serves an Employer well because when a claim does occur, the higher expected claims will help “absorb” the actual paid losses (e.g. If you have $10,000 in claims during a policy term but your are expected to have $15,000 in claims, that year should* still result in a credit to your Mod). 

This is an simplified explanation but a good one.  If you’d like more details, including additional EMR factors, and going a bit deeper in to the math (but not too heavily – dividing by 100 and a bit of multiplication) Check this post: 

    The Experience Mod Rating in Simple Terms 

At a minimum it can serve as a sleep aid. 

If this Post may have value for one of your Employees or your Employer, the share option below includes an email option.

* I say “should” because it is contingent on whether or not the losses exceed your expected Primary Losses – this topic is a bit more involved. If you’d like more information see this Post:  The EMR Split Point

I can almost guarantee a brilliant night of sleep if you read both linked posts.

Posted by Dan Hebbeln: [email protected]