As contractors continue to be judged by an Experience Modification Rate (EMR) rating, we need to understand why it is so important in the environmental industry. The EMR is a term used in the insurance business – specifically in workers’ compensation insurance – to describe the adjustment of an annual premium based on the cost of past injuries and the probability of future risk. EMR ratings can have a major impact on a business. The lower your rating, the lower your premiums will be. Typically, an EMR rating of 1.0 is considered average.Typically, if a contractor has an EMR greater than 1.0, the company is perceived as a high risk contractor not only to the client but to the insurance carrier as well. An EMR rating greater than 1.0 means the contractor more than likely had a workers compensation indemnity claim. To reduce future risk, the insurance company raises the business’ premium. This increase will stay with the business for three years. Experience modifiers are normally recalculated every year. Each year, data from the previous policy period (excluding most recent) is added to the three-year window and data from the oldest year in that window is removed.
For the next three years, the EMR rating impacts the contractor and their ability to win new contracts and maintain current ones. Therefore it is critical to the life of the company to maintain an EMR below 1.0.
Today we are pleased to announce, that Handex’s EMR is 0.76. We achieved this by expanding our safety focus to include a heavier emphasis on participation from each staff member as opposed to rigid policies and procedures being the driving force. This caused a natural progression into good-catch reporting culture rather than near-miss reporting. This enabled us to prevent a near-miss before occurrence. Policies and procedures are essential in any business but should not be the cornerstone of safety.
Good job, Handex! Let's keep up the great work!