The Experience Mod: What it is and how it can lower your premium

| September 07, 2023

The Experience Mod Explained

Workers’ compensation insurance is a crucial component in protecting employees if a work-related injury or illness happens on the job. It provides injured workers with medical benefits, wage replacement, and other necessary resources while safeguarding employers from costly lawsuits. One crucial aspect that plays a significant role in determining the cost of workers’ compensation insurance is the experience modification rating, also referred to as the EMR or mod. 

The EMR is a numerical representation of an employer’s past workers’ compensation claims experience compared to other employers of similar size in the same industry. It measures an employer’s safety record and risk profile about their workers’ compensation insurance coverage. 

Factors that Impact the EMR
Several factors influence the EMR of an employer. One crucial factor is the employer’s claims history, with the number and cost of previous claims playing a significant role. By implementing adequate safety and risk management practices, employers can prevent injuries and reduce claims, positively impacting the the EMR.

Additionally, the size of an employer’s payroll affects the EMR, as larger payrolls indicate a higher exposure to potential claims. Industry classification is also considered, as different industries have varying levels of risk. The EMR is calculated by comparing an employer’s claims experience to similarly sized businesses in the same industry, ensuring fair comparisons and accurate risk

Controlling an EMR
Employers can proactively implement different strategies to influence their EMR positively. By implementing the following five risk management strategies and continuously monitoring and evaluating their effectiveness, employers can improve their safety records, reduce the frequency and severity of claims, and ultimately lower their EMR. A lower EMR translates into reduced workers’ compensation insurance premiums, leading to significant cost savings for the organization.

  1. Implement a Robust Safety Program
    A well-designed safety program focuses on preventing accidents and injuries in the workplace. The number of workplace incidents can be reduced by implementing safety measures, training employees on proper procedures and enforcing safety protocols. This leads to fewer workers’ compensation claims and lower associated costs, positively affecting the EMR. 
  2. Actively Manage Claims
    Taking a proactive approach to claims resolution can expedite claim closure and reduce costs. Promptly reporting claims initiates early intervention and prevents costs from escalating. In addition, maintaining accurate documentation to establish facts and defend against fraudulent claims helps reduce the costs of claims. By reviewing claims, employers can identify patterns and implement loss control measures to prevent future incidents. Overall, actively managing claims demonstrates effective claims management practices, which can lead to lower claim costs, reduced EMRs and potential cost savings on workers’ compensation premiums.
  3. Report Claims to Carrier Immediately
    Reporting claims immediately to the insurance carrier is crucial for managing an EMR effectively. Companies can facilitate timely claim processing and investigation by promptly reporting workplace incidents and injuries. This enables the insurance carrier to initiate early intervention and provide appropriate medical treatment, helping to prevent claim costs from escalating. Moreover, insurance carriers view prompt reporting as a responsible risk management practice, which can positively influence the EMR. By demonstrating proactive and effective claims management, companies may be more likely to achieve a lower EMR, resulting in potential cost savings on workers’ compensation premiums. Therefore, immediate reporting of claims plays a significant role in maintaining a favorable EMR and overall cost control for the organization.
  4. Have a Return-to-Work Program
    Implementing a return-to-work program has a positive impact on an EMR. By offering suitable transitional duties or accommodations, companies can facilitate the timely return of injured employees to work, even in a modified capacity if necessary. This proactive approach reduces the duration of disability, minimizes wage loss and promotes faster recovery. When injured employees are actively engaged in their recovery and reintegrated into the workforce, it helps control claim costs. Insurance carriers recognize the effectiveness of return-to-work programs and view them as responsible risk management practices. This positive perception can contribute to a lower EMR, resulting in potential cost savings on workers’ compensation premiums for the company. In summary, a well-implemented return-to-work program demonstrates a commitment to managing claims effectively and may lead to a reduced EMR, benefiting both the injured employees and the organization.
  5. Maintain a Safe Work Environment
    Maintaining a safe work environment has a positive impact on the EMR. By prioritizing safety practices, companies can reduce workplace incidents and injuries, leading to fewer workers’ compensation claims and lower associated costs. Insurance carriers view a safe work environment favorably, resulting in a lower EMR. A safe work environment also promotes employee well-being, productivity, and engagement. Implementing safety training, protocols and continuous improvements prevents accidents, further reducing the need for claims and positively influencing the EMR. Therefore, maintaining a safe work environment decreases incidents, controls costs, demonstrates responsible risk management and potentially leads to lower workers’ compensation premiums.

Want more workers' compensation strategies? Call us today!