Experience Modification Rate (EMR): What It Is and How It Affects Your Premium

Understanding your experience modification rate (EMR) is essential for any Florida business owner or manager looking to control workers’ compensation insurance costs. Given that workers’ compensation insurance is legally required for many employers in the Sunshine State, and that your EMR plays a key role in determining your rates, knowing how this figure works can be an essential part of financial planning and budgeting.

What Is an EMR?

An EMR is a numerical factor used by insurance companies to gauge your business’s workers’ compensation claims history compared to similar businesses. In simple terms, it reflects how your workplace safety record stacks up against others in your industry. An EMR of 1.0 is considered average. If your EMR is below 1.0, it means your claims history makes you considered less risky to insure than the average, while a rate above 1.0 indicates a higher-than-average number of claims and, subsequently, greater perceived risk.

How Is EMR Calculated?

Insurance carriers calculate EMR using several years of your company’s workers’ compensation claims data, typically looking at the past three years (excluding the current policy year). These calculations may consider the following criteria:

• The frequency and severity of workplace injuries
• The size of your payroll
• Industry risk factors

How Does EMR Affect Your Workers’ Compensation Premium?

Your EMR acts as a multiplier on your workers’ compensation insurance premium. Consider the following examples:

• If your business has an EMR below 1.0, you can be rewarded for a strong safety record and enjoy lower rates.
• Businesses with EMRs above 1.0 typically need to pay more for coverage. For example, if your EMR is 1.25, you may pay an extra 25%.

This means that investing in workplace safety and effective risk management can have a direct financial benefit for your business.

We’re Here to Help

Our team at Lakewood Financial Services, Inc can help businesses in and around Bradenton, FL understand their EMR, identify ways to improve it and manage workers’ compensation costs effectively.

Contact us today to learn how we can help your business manage risk and secure workers’ compensation coverage at an ideal rate.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.