Understanding EMR Score: Impact on Workplace Safety and Costs

Is your business paying too much for workers’ compensation?  Your EMR (Experience Modification Rating) may be the reason for the high insurance cost of your business.

Think of your EMR as a score awarded to your business for safety. This score can impact your profits and ability to get contracts. 

Construction companies already pay 3.6% of total compensation towards workers’ comp insurance, which is already twice what most companies pay on average. A poor EMR score can push this cost even higher.

By reading this article, you’ll avoid this fate by learning:

• How EMR scores directly affect your insurance premiums and potential savings
• Why your EMR calculation weighs small, frequent claims more heavily than large ones
• Practical strategies to lower your score and unlock better business opportunities
  

What is an EMR Score?

Your EMR score is comparable to a credit score for a workplace. It’s an indication of how your business compares against other businesses in your industry based on safety insurance claims. 

Your workers’ compensation insurance rates are determined by this score. If you have a good safety record, your EMR discounts your insurance rates.

Insurers use 1.0 as a benchmark; similar to a “C grade” at school. If your score drops below 1.0, you’re doing better than average and may qualify for a discount on your premium.

For instance, if your EMR is 0.85, you’re 15% below baseline pricing. If you score greater than 1.0, then your premiums will increase, and you may be excluded from more business opportunities. 

Most companies can achieve scores between 0.7 and 1.2, though exceptional safety programs can push that number even lower. 

Your score isn’t permanent-–it updates annually based on your three-year claims history, giving you regular opportunities to improve. The best part? Every improvement in your EMR score directly translates to cost savings and more business opportunities.

How EMR is Calculated

Have you ever wondered how insurance companies calculate your EMR score? It may seem complicated at first, but the process is actually quite simple as it involves several components working together.

The NCCI computes your EMR score using information from three years back but excludes the most recent year. The rolling nature of your EMR calculation means that your safety improvements won’t be reflected in your score immediately, but it also protects you from being penalized for recent claims that are still being processed.

Your score considers three primary factors:

• Your actual losses (workers’ compensation claims)
• Your payroll data by job classification
• Your expected losses based on industry averages

Here’s what makes this calculation unique: small claims under $17,000 impact your score more than large ones. This approach encourages preventing frequent minor incidents rather than just focusing on major accidents. 

For smaller companies, this can be challenging since a single incident can have a bigger impact on your score compared to larger organizations.

On the positive side, your EMR score is updated annually, giving you regular opportunities to improve. While 39 states use NCCI for calculations, some states maintain their own rating systems, so it’s worth checking your local requirements.

Why EMR Score Matters

Did you know a single number could save–or cost—your company hundreds of thousands in insurance premiums? Your EMR score’s impact on your business goes far beyond just safety statistics. The following breaks them down:

Financial Impact

Let’s talk real numbers: with a base premium of $200,000, an EMR of 1.25 means you’re paying $250,000 in premiums, while an EMR of 0.75 drops that cost to $150,000. 

In construction, where workers’ compensation accounts for 3.6% of total compensation costs—double the average across all industries—these differences directly affect your bottom line.

Revenue Opportunities

Your EMR score can make or break your chance at winning contracts. Many project owners and general contractors automatically reject bids from companies with EMR scores above 1.0. Just ask Dutra Group, who lost an $8.9 million pier substructure project largely due to their EMR rating.

Company Reputation

A strong EMR score does more than just lower costs—it opens doors and helps establish a credible brand. Your score signals to potential clients, partners, and employees that you’re serious about safety. This reputation boost can give you a competitive edge in bidding processes and help attract top talent to your organization.

How to Improve and Maintain a Low EMR Score

Interested in slashing your insurance premiums while building a reputation as a safety leader? Safety Plus’ proven approach to EMR improvement is built on six key pillars. By integrating these best practices into your safety management strategy, you can transform your EMR score from a liability into a competitive advantage.

1. Safety Management System

A structured safety management system is the foundation of an effective risk reduction strategy. Implement a system that includes documented policies, procedures, and safety audits to proactively identify and mitigate risks. Ensure that all employees have access to clear safety protocols and reporting mechanisms, creating an organized and accountable safety framework.

2. Training & Education

An educated workforce is a safer workforce. Conduct regular safety training programs, including job-specific training, toolbox talks, and OSHA compliance courses. Empower employees with the knowledge and skills they need to prevent accidents and respond appropriately in case of emergencies. Safety Plus offers comprehensive training solutions to help ensure your team is well-prepared.

3. Employee Engagement

Building a culture of safety starts with active employee participation. Encourage open communication about safety concerns and recognize employees for proactive safety behaviors. Establish safety committees, reward programs, and leadership engagement initiatives to foster a work environment where safety is everyone’s responsibility.

4. Risk Assessment & Hazard Identification

Prevention is the key to maintaining a low EMR score. Regularly assess workplace risks through hazard identification programs, safety audits, and job hazard analyses. Utilize predictive analytics and incident trend tracking to address potential risks before they lead to claims. By staying ahead of hazards, your business can minimize costly incidents.

5. Incident Management & Claims Reduction

Efficient claims management plays a crucial role in improving your EMR score. Report incidents promptly, maintain detailed records, and implement a structured return-to-work program to support injured employees in a safe and timely manner. Safety Plus’ claims management strategies focus on minimizing the frequency and severity of claims, directly impacting your EMR score.

6. Compliance & Continuous Improvement

Regulatory compliance and continuous safety improvement are non-negotiable for maintaining a low EMR score. Stay up-to-date with OSHA regulations, industry best practices, and state-specific requirements. Regularly review and enhance your safety programs to ensure ongoing improvement. Safety Plus provides the tools and support needed to help businesses remain compliant and continuously refine their safety processes.

Take Action Today

Stop letting your EMR score hold your business back. The path to lower insurance premiums and better business opportunities starts with a single step.

Your EMR score tells a powerful story about your commitment to safety, and that story directly impacts your bottom line. While the construction industry average hovers at 1.0, Safety Plus clients maintain an impressive average EMR of 0.81—translating to significant premium savings and more bidding opportunities.

By adopting Safety Plus’ six-pillar approach, you can reduce workplace incidents, cut costs, and position your company as a leader in safety excellence. 

Take the first step today by requesting a consultation or learning more on our website.