Your experience modifier (EMR) is one of the most powerful factors in your workers comp premium. A high EMR means you are paying significantly more than the industry average. Here is how to bring it down over time.
Understand How Your EMR Is Calculated
Your EMR is calculated using your claims history from approximately three to five years ago, excluding the most recent year. The rating bureau compares your actual losses to what would be expected for a business of your size and industry. More losses than expected means an EMR above 1.0. Fewer losses means below 1.0.
The Fastest Way to Lower Your EMR Is to Reduce Claims
The most direct path to a lower EMR is fewer and smaller claims. Invest in safety training, provide proper protective equipment, enforce safety procedures, and document everything. A meaningful reduction in claim frequency over two to three years will move your EMR noticeably.
Return-to-Work Programs Help
When an employee is injured, getting them back to work in a modified duty role as soon as medically appropriate reduces the wage replacement costs of the claim. Lower total claim costs mean a smaller impact on your EMR. Employers with formal return-to-work programs consistently maintain lower modifiers than those without.
Review Your Loss Run Reports for Errors
Errors in loss run reports do happen. Claims that have been closed and paid should show their final amount, not an open reserve. If a claim appears open with a higher reserve than its actual cost, it may be inflating your EMR. Request your loss runs annually and review them with your agent for accuracy.
Work with Comp Matters Inc.
Comp Matters Inc. reviews experience modifiers for East Coast businesses and identifies opportunities to challenge errors or reduce costs. Call (631) 248-2500 for a free review.
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