WORKERS ' COMPENSATION
What Are E-Mods
And Why Do They Matter ?
BY : GWENYTH P . LUU , CLCS PARTNER , COMMERCIAL LINES JGS INSURANCE , A BALDWIN RISK PARTNER
It ’ s known by several names : experience modification rate ( EMR ), experience modification factor ( EMF ), experience modifier and simply “ the mod .” But what is EMR ? Where does it come from ? Why does it matter ? And , as an employer , what can you do to control it ?
The data provided by the experience mod worksheet underpins the assessment of a company ’ s safety record and claims experience and is used to calculate its experience modifier , a numerical multiplier applied to the annual workers ’ compensation premium to determine whether a company will get a discount or pay a premium on its premiums , and for how much .
Worksheets can look different depending on what rating bureau applies to you as an employer . Some states use the National Council of Compensation Insurance ( NCCI ), and other states use independent rating bureaus that are created by the state statutes . The state your company is located in will dictate how your modifier is calculated .
In comparing actual losses to expected losses based on industry standards , the experience rating worksheet helps determine whether your organization ’ s claims history is better or worse than the industry average . An experience modification of 1.0 is the baseline and applies to businesses that reported losses equal to the industry average . In this instance , premiums would not change . However , if your business has a lower experience modification rating ( EMR ), you will enjoy reduced premiums . Those with higher EMRs will find their premiums inflated .
These are the main components of an experience modification worksheet :
• Policy period — specifies the time frame for which your EMR is being calculated , which typically spans three years but excludes the most recent policy year to ensure accurate historical data .
• Claims data — provides comprehensive information about each claim made by an employee during the calculation period , including their claim number , date of injury , type of injury , amount paid , and the reserve amount .
• Expected losses — lists the expected loss ratio ( ELR ) for your class code , which is calculated on actuarial data from your industry and state .
• Experience modifier calculation — divides the dollar amounts of expected losses plus actual losses incurred by your business by expected losses .
• Impact on premium — applies the EMR to the calculation of your company ’ s insurance premiums .
• Experience rating adjustment — outlines any adjustments made to your experience rating that may be specific to your state , related to your discounts , or based on other factors affecting your experience modifier .
• Loss data summary — provides a table overview of actual losses , expected losses , and the resulting experience modifier to help stakeholders quickly assess the company ’ s claims history and EMR .
What can employers do to control the Experience Mod ?
• Manage lost time cases with appropriate return-to-work programs .
• Report claims within 3 days post incident to allow for quick investigation and claims handling .
• Use insurance carrier ’ s preferred provider network to control claims cost
• Audit and monitor open claims to ensure appropriate loss reserving practice and ultimate resolution .
Understanding the experience modification worksheet is important for businesses to help manage their workers ’ compensation insurance costs effectively , to implement strategies for improving workplace safety , and to reduce claims . It also ensures that the EMR accurately reflects the company ’ s claims history and that the amount charged for workers ’ compensation premiums is fair . +
Gwenyth P . Luu helps organizations improve their bottom line and lower their total cost of risk by implementing the JGS Proactive Service Platform . The JGS Proactive Service Platform is an inclusive strategy that focuses on primary cost drivers of a risk management program . Gwenyth helps businesses understand all of their potential and actual costs and liabilities , execute an actionable strategy , and deliver superior client service and support . The JGS Proactive Service Platform is driven by continuous strategy and service delivered on a daily basis throughout the year . The service platform includes risk control strategies , claims advocacy and management , contract reviews and insurance program design reviews .
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