What is an EMR, and How Does it Impact Your Business?

Body

SuretyHR

Anyone handling workers compensation insurance, risk management, or proposal management has heard the acronym EMR often – maybe without knowing what it really entails or where it comes from. It stands for Experience Modification Rate, which still isn’t self-explanatory to most. 

It can impact several aspects of operations for some companies, but will always impact workers’ comp premiums.  It’s determined by similar parameters from state to state, but can vary depending on the policy’s home state. 34 states go by the rules of NCCI, the National Council on Compensation Insurance. 12 states use modified NCCI rules to determine EMR, and the remaining four (including Ohio, Washington, Wyoming & North Dakota) are “monopolistic,” meaning they’ve created their own set of rules loosely based on NCCI operations.  

Ohio is monopolistic, meaning the Bureau of Workers’ Compensation (BWC) dictates both the EMR and the base rates. Base rates are determined by job classifications and the risk associated with them, and include catastrophic claims costs, safety & hygiene costs, and surplus costs. If a certain type of work has high claims industry-wide, it will have a higher base rate than one with low claims frequency. The base rate of office staff (8810) is $0.10, while the base rate for tree pruning (0106) is $10.03. It acts as a multiplier for every $100 of payroll assigned to that manual code (NCCI code). EMR can act as an additional multiplier for these rates. Below are some examples of how different EMRs can impact premiums, using Ohio BWC’s current base rates.

see the rates