The Experience Mod Factor, E-Mod, EMR - You may have heard these terms while talking about your business insurance. The experience mod factor is an extremely important component that is taken into consideration when your workers’ compensation premiums are decided.
An EMR factors in the number of insurance and workers’ compensation claims that were reported to the National Council on Compensation Insurance (NCCI) over the last five years. For contractors, insurance companies use your businesses EMR to look into your past claims history to gauge your chances of future risk.
How Does Workers’ Compensation Work?
Workers’ compensation is a business insurance policy that is legally required in more states in the US. A workers’ compensation policy will protect all of your employees if there is an incident while working. Since work comp policies are required for almost every business, insurance carriers use something called the Experience Mod Factor to calculate what your premiums are.
How Are Experience Mod Factors Calculated?
When calculating your E-Mod Factor, your previous five years of workers’ comp claims are what is used to provide your rating. They use your previous claims history to predict any claims that may arise in the future.
The average E-mod score is 1.00. Scoring below this number will ensure a lower premium, and scoring above will result in a higher premium. Making sure that your actual losses are lower than your expected losses will result in a lower workers’ compensation premium.
How to Lower Your Experience Mod Factor?
When adjusters look at your Experience Mod Factor, what they really want to see are safety measures implemented that can help avoid claims or accidents from happening before they occur.
Although the time frame of how quickly your score is lowered will vary, there are ways to lower your experience mod factor rating. Since they are looking at workers’ compensation claims, one way to lower your e-mod score is by implementing safety measures that can help avoid accidents.
Some states in the US have a rule called the Experience Rating Adjustment (ERA). This rule can allow a discount of 70% of what is reported for medical claims. To see if this rule applies in your state, feel free to reach out to one of our agents.
The best way to find out your Experience Mod Rating and how to lower it is by speaking with an insurance professional. One of our industry specific agents can talk you through risk management practices catered to your line of work. Feel free to call us at (303) 279-9700, or fill out the form below.