The Experience Modification Rating (let’s call it the Mod. for short, sometimes referred to as the EMR) can have a significant impact on your Workers’ Compensation Premium. Your Mod. indicates whether your losses are better or worse than expected.  If better than expected, you receive a credit, if worse, a debit is applied.

How it works (this will be a very rudimentary explanation without detailing all of the math):

  • The type of work performed by all employees (Defined by a Class Code in the first column of the Mod. Sheet)
  • The total payroll
  • The Expected Loss Ratio (ELR) per duty performed. (The ELR is listed in the 2nd Column of the Mod. Sheet)

Using the example of a Heating and Cooling Contractor (HVAC) with Technicians (Techs) in the field and Clerical Employees in the office:

  • The Techs have an ELR of 2.62 – this means that for every $100 of premium collected the State of MO (in 2014) anticipates total claim payments of $2.62
  • For the Clerical Employees the ELR is just .12 (which reflects their much lower exposure to work related injury).

Determining Estimated annual Losses (e.g. Claim Payments):

Our Employer pays Techs $100,000 annually and Clerical Employees the same. Now lets see what MO will anticipate in Claims payments:

  • Tech Payroll $100,000/100 x 2.62 (ELR) = $2,620
  • Clerical Payroll $100,000/100 x .12 (ELR) = $ 120

Determining the Mod (in very simple terms)

Actual Losses for the policy term (actually 3 years of data is utilized) is now divided by Expected Losses. If Actual Losses are significantly less then Expected our Employer will receive a nice credit.

For Information regarding how to help control your mod. call 636-519-0059 or email: - I will be happy to assist.

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Posted 2:01 PM

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