Workers Comp EMR
Many business owners wonder why EMR is essential regarding workers’ compensation insurance. In addition, the Experience Modification Rate (EMR) is critical in estimating the cost of workers’ comp premiums. Furthermore, EMR is a grade or point system given by the state rating bureau National Council on Compensation Insurance (NCCI). What’s more, NCCI calculates a company’s e-mod based on its actual injury claims losses and possible risks in the future. Likewise, maintaining a low experience mod rating lessens the cost of workers’ compensation rates. So, to save money on workers comp insurance, here are 5 killer ways to lower your EMR rating.
5 Killer Ways to Lower EMR Rating
The main goal is to lessen your company’s frequency and severity of claims, as e-mod rating depends on your company’s actual incurred losses. Follow these tips to improve your experience modification rating.
Reduce the Cost of Claims
1. Develop programs and procedures to lessen the frequency and severity of claims or losses.
Safety Program
A safety program provides clear and safe work processes for employees. Then, the company’s management must properly inform employees about safe work procedures. In addition, make sure employees know and understand the safety program to avoid safety violations. Furthermore, Safety work conditions help prevent occupational injuries and illnesses.
Accident Investigation Program
An accident investigation program helps determine the cause of workplace accidents. Having an insight into how, what, when, and where the accident happened makes it easier to identify what caused it. So, from there, companies can develop measures to prevent accidents from happening again.
Accident Prevention Procedures
Develop safety procedures based on the results of accident investigations. Moreover, identifying possible risks and hazards is insufficient to prevent workplace accidents. In addition, creating solutions to workplace problems is the key to improving a company’s e-mod rating.
Return To Work Program
A return-to-work program helps injured workers return to work quickly after an injury. Moreover, an employee with a temporary disability is an open claim. An open claim stays on the company’s experience mod rating until it gets closed. Also, it is essential to quickly close claims to clear your claims history and improve your e-mod rating.
Claims Management Program
Effective claims management helps quickly and efficiently file, settle, and close claims. In addition, claims stay on the claims history for three years. Moreover, the faster you clear your company’s claim history, the better e-mod rating you will get.
Develop an Injury Triage
Employees may suffer from different types of injuries. Some are significant injuries needing emergency medical treatment. What’s more, some may be minor injuries that can be managed by an occupational health nurse, trained safety officer, or by the employee itself. Moreover, having an injury triage will help identify which injury needs medical attention and which doesn’t. Triaging injuries significantly lower the number of unnecessary claims. Furthermore, insurance carriers like Travelers and AmTrust Financial offer a 24/7 nurse triage line. In addition, a nurse triage line helps employees determine if their injuries need urgent medical attention.
Provide Workplace Training to Employees
Workplace training develops knowledge and enhances employee skills and efficiency. As well as well-trained employees are less likely to make workplace mistakes. Also, fewer mistakes mean less risk of accidents and injuries.
Employee Training to Lower the Risks of Workplace Accidents
- Orientation
- Onboarding
- Technical Skills Development
- Safety Training
- Team Training
2. Experience Rating Adjustment (ERA)
Most states approved the rule of experience rating adjustment. With ERA, rating bureaus reduce 70% of the cost of medical-only claims in the estimation of e-mod rating. Furthermore, nearly all states under NCCI follow the ERA rules except for Colorado, Massachusetts, and Oregon. In addition, ERA helps companies lower their incurred losses, resulting in lowered EMR ratings.
3. Proper Classification of Employee Codes
Insurance companies use three factors in calculating a company’s workman’s compensation rates. Also, it includes class codes, payroll, and experience modification rates. Class codes indicate the level of risk a specific job role has. Construction, mining, and logging employees usually have higher classification codes. The more risks a job role has, the higher the class codes. Improper classification of employees can cause you to pay more workers’ comp premiums.
4. Statistical Unit Date
Every business has a statistical unit date. A unit of statistical data is a cut-off date when insurance carriers report the company’s annual claims statistics to the rating bureau. The reports include open claims, closed claims, claims adjustments, and claims reserves. Every time a company has an open claim, the insurance provider assigns an open reserve.
An open reserve is the money insurance companies set aside for the expected expenses of policyholders’ claims. The insurance company will reserve a cap to pay for medical and benefit claims. The cap insurance companies reserve usually put for claims is higher than the actual settlement costs.
That’s why it is critical to have efficient claims management for the timely settlement of workers’ comp claims. Filing accurate claims reports before your company’s unit statistical date is essential as it affects your next e-mod rating.
Schedule of Unistat Date
Don’t forget to update your company’s claims records before your unit statistical date. To get your Unistat Date, add 180 days or 6 months to your policy renewal date.
5. Net Deductible
Some states allow insurance companies to offer a net deductible plan to business owners. If state laws allow, business owners can get net deductibles on their workers’ compensation policies. When employers opt for net deductible plans, they must pay a certain amount every time their employees file claims. Net deductibles help lower EMR ratings as insurance companies only report the net costs of claims in NCCI.
Remember, the basis of a company’s modification rating is its incurred losses. When you share the cost of employee claims, your company’s incurred losses decrease. Employers can get small or medium net deductibles, whichever their state laws allow.
Small deductibles range from $100 to $10,000. Medium deductibles range from $10,000 up to $75,000. The net deductible may apply to medical or compensation claims or both depending on the state laws. States like Colorado allows business owners to have small deductible claims. Colorado business owners can opt for a net deductible ranging from $500 to $5,000. The net deductible applies to both medical and compensation claims.
How E-MOD Works and Calculated
To effectively improve their e-mod rate, companies must understand how an experience mod is calculated. Rating bureaus use an experience modifier to determine a company’s level of risk. Newly opened businesses typically start with an x-mod of 1.0, which is the average. After four years, NCCI will get the company’s claim history for 3 consecutive years, excluding the most recent year. To get the latest EMR, NCCI will compare the company’s claim history with other businesses within the same industry.
How Can a Company Qualify for an Experience Modification Rate?
Qualification for experience mod rate varies as states have different workers’ compensation laws. In Colorado, a business can qualify if it pays a minimum of $4,000 for workers’ comp premiums for 3 consecutive years.
What is a Good Experience Mod Rate?
New businesses typically get an average e-mod rating of 1.0. NCCI compares a business’s risk with other businesses in the same industry. An experience mod rate is considered high if it is more than the industry average. Employers must maintain an average or lower than average EMR to get lower workers comp costs.
How to Lower Workers’ Compensation Premiums
Though EMR is one of the significant factors that influence the cost of your insurance premiums, some variables impact the price of workers comp. Aside from improving your company’s experience modification rating, there are also some ways you can save on your workers’ compensation premiums.
Discounts
Private insurance companies typically offer different types of discounts to their customers. Business owners can save a lot of money by getting discounts. Talk to your insurance agent about the discounts your company is eligible for.
Bundling different insurance policies
Business owners usually need different business insurance policies to protect their businesses. Insurance companies usually give discounted premiums to clients with multiple insurance coverage.
Insurance Coverage Every Business Needs
- Business Liability Insurance
- Workers Compensation Insurance
- Commercial Property Insurance
- Commercial Auto Insurance
- Shop around
Shopping around lets you get the best possible deal on workers’ comp insurance. Finding the best workers comp company regarding affordability and coverage is essential. Sometimes it’s not all about the cost of workers comp premiums but also the quality of coverage an insurance company provides.
Though there are many ways to prevent workplace risks, having workers’ compensation insurance on standby is vital. It’s true, prevention is better than cure. But we also know accidents happen. Though workers’ compensation laws aim to provide financial support to injured or ill employees, it also protects employers. Workers comp policy protects employers from state fines and penalties. It also protects business owners from unexpected financial expenses from workplace accidents and illnesses.
Team AIS in Denver, CO, has insurance agents who are experts in workers’ compensation laws. We are an independent insurance agency that provides adequate protection to all businesses. Contact us now, and we will assist you in finding the right coverage according to your business needs.