If you want to lower your workers compensation premium while prioritizing employee safety – this one’s for you!

As you probably know, workers’ compensation insurance is crucial in protecting employees in the event of workplace injuries or illnesses. And, an important piece of workers compensation insurance is called the Experience Modification Factor (EMF). 

What is the Experience Modification Factor (EMF)? The EMF is a number that insurance companies use to adjust workers’ compensation insurance premiums. 

And here’s the thing…businesses that really understand the EMF and use it to help reduce their risk can have a competitive advantage. Why? Knowing your EMF can help your company manage its costs effectively and correctly budget for insurance premiums. It can also help you better understand insurance premiums while prioritizing safety for your business and employees. As a bonus, it encourages better partnerships for insurers and more informed discussions about risk management. 

Ready to improve your EMF? Connect with one of our team here:

How does the EMF affect insurance premiums? Businesses with a lower EMF (below 1.0) are usually awarded lower premiums. Those with a higher EMF (above 1.0) can expect to pay more.

Why is it used? The EMF helps promote workplace safety and encourages companies to prioritize employee safety. It incentivizes businesses to educate their employees, implement safety measures, and deploy risk management strategies.

How is the EMF calculated? The EMF is based on a formula set by the National Council on Compensation Insurance (NCCI) or state-specific rating bureaus. The calculation is based on the business’s past claims history. It compares the severity, frequency and cost of a business’s compensation claims to similar-sized companies in the same industry. It usually looks at the number of claims over a specified period.

The formula written out looks like (Actual Losses/Expected Losses) = EMF

The EMF is also affected by several other factors, including payroll size, industry classification for risk, and claims history.

How is it written? You can write the EMF as a ratio, where 1.0 is the average experience. If a company has fewer or less severe claims than expected, that number dips below 1.0. If they have more, it rises above 1.0.

Can a business’s EMF change over time? Yes! It is essential to review claims history and other factors for accuracy and to see where businesses can improve safety and risk management processes. Insurance providers will provide EMF information to clients for review.

The EMF is usually reviewed yearly and updated using the three most recent years of claims data. The most recent year is given the most weight. Industry changes, payroll changes, mergers and acquisitions are other factors contributing to a company’s changing EMF.

How do I keep my EMF low?

• Identify and mitigate workplace risks
• Implement a safety and training curriculum
• Promote a culture of safety and update policies regularly
• Ensure employees have proper tools, equipment, and protective gear
• Identify trends in claims data and take steps to address them
• Check that loss and payroll information is correct
• Consider a return-to-work program
• Work with insurance professionals and independent auditors to analyze your company’s needs

What Clients Say:

“First time I ever had a reduction in my workers comp insurance!!!” – Mark

“Mr. Daniel Morton, was very knowledgeable and respectful. He helped me find the best and most cost efficient workers comp and general liability insurance policies for my start up. He answered the questions that I had concerns about and took the time to explain the process to me. I also received a swift response via text, email and phone conversations. I will definitely spread the good news about the character of Fusco & Orsini and a job well done!” – Cortez

Our team is ready to partner with you to analyze your EMF and work to find solutions to keep it low!

You can connect with our team by completing THIS FORM.

Sources:

Zywave (Small Business Insights – What is an Experience Modification Factor?)

Reference list: OpenAI. (2023, July). [What are the most common questions and answers about the experience modification factor]. Retrieved from [ChatGPT.com].