If you were to survey several HSE Managers or HR Managers and ask them what the perfect EMR is, what do you think they would say? Several would not agree with one another, because a perfect EMR depends on each individual’s perspective. Just like everything else, such as the best Thai in San Diego (which is Sab-E-Lee, but I digress), it is all about perspective. So let’s start with the basics: what is an EMR?
The Experience Modification Rate is a number that is used for several purposes. Most importantly, it is used by insurance carriers to determine past and future risks. The lower the EMR, the better the Workers’ Compensation premium. This number is determined by taking information such as payroll, losses or claims (both severity and frequency), risk of the industry and much more from other similar companies over a three-year timeframe. It is not a simple calculation and there are MANY variables that apply!
Now back to perspective. A .90 may be great for one employer and not so good for another. If you are compared against the highest performers within your industry, whose EMRs may be very low, a .90 could be considered high. However, if the industry average is 1.0, a .90 rating is slightly low, in that context. Experience rating is specific to each individual employer and their specific circumstance. No two employers have the same experience, but some employers look at the EMR as a report card, and it’s quite easy to see why as claims and loss history greatly impact the experience formula.
So maybe a better question is “how am I performing against myself?” Is an EMR of .90 good for you? Well, it depends on your history. You need to consider the current EMR within the context of where you have been. If the .90 is an improvement from the last several years, then, yes, a .90 may be good. If history shows lower EMRs and the .90 is now the highest in several years, then no, that’s not a good sign. It’s called trending, and if you are not trending in the right direction, there is room for improvement!
Your perfect EMR should be the lowest EMR you can possibly have. It’s the EMR when you have gone claim-free within the experience period. Is it really possible to achieve the perfect EMR? Yes, yes it is!
The good news is the perfect EMR can be achieved, but the bad news is it will take time; approximately three to four years of time of being claim-free! In order to begin trending in the right direction, you need to prevent losses and/or injuries, and you must evaluate your entire safety program to identify gaps, trends and areas of improvement. You must stay on top of your safety game, and ACT can help! Our occupational health and safety consultants partner with our clients to reduce workplace injuries and meet compliance and strategic business goals. Our experienced Certified Safety and Industrial Hygiene Professionals work to increase environmental, health and safety awareness, decrease accident and injury rates, increase productivity and educate employees about their company’s HSE priorities.