What is EMR and How Does it Affect Your Construction Business?

If you run a construction business, then you need to become all too familiar with Experience Modification Rate (EMR). The EMR is a number insurance companies use to weigh past costs of injuries and compare them to chances of injury in the future. This number can have a lasting impact on your business. We’re going to discuss EMR and how safety can affect a construction firm’s bottom line.


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What is a Normal EMR Rating?

Currently, an EMR of 1.0 is deemed the construction industry average. The lower you drop that number, the less worker compensation insurance premiums your company will have to dish out.


Therefore, if your business remains injury-free, your EMR rating will go down. Injury-free businesses means the insurance company saves money. As a result, your business gets a slice of those savings as well.


When your business’ EMR climbs above 1.0, it means that your company needed to run a worker compensation claim. Since your insurance company had to pay money out to cover the claim, they will raise the premiums for your company’s worker compensation plan. After the claim, the EMR will be stuck on your company’s profile for a whole three years.


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How are EMRs Calculated?

While a bit complicated, a more simplified version of EMR calculation would be as followed:


Actual Claims / Expected Claims


For the complicated version, there are a few criteria that are taken into consideration when an EMR is calculated. These factors are:


  • Three-Year EMR Class Code
  • Payroll Cost
  • Losses Over Five-Year Period to National Council on Compensation Insurance (NCCI)


Insurance agencies then take your company’s individual factors and compare them to other businesses with similar results. They consider these companies’ EMR as well. This is all compared over a three-year period. For example, if you were to calculate a 2019 rating, you would look at comparables from 2015 until 2017.


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How to Lower Your EMR

While 1.0 is the industry average, you would be crazy to not want an even lower EMR. Therefore you should strive to keep your workplace safe from incidents. The more accidents your business has, the more it is going to hurt your company’s bottom line. So, not only is ensuring your construction sites are safe work environments ideal for your workers, it’s good for your bank account as well.


Adhering to OSHA standards and keeping your claims down is the only way to lower your EMR. The only other thing you can hope for to help your score is that other construction companies that are your size are also remaining safe. Everyone remaining injury-free will make comparables better for your company’s rating.


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