Can You Get Dumped by Your Insurance Because of a Bad Workers’ Comp EMR Rating?

Workers’ Compensation premiums are calculated using experience modification rates (EMRs). Having a bad EMR means your company is at a higher risk of workplace accidents and might see its coverage dropped.

Experience modification rates help Workers’ Compensation carriers evaluate risk and whether or not they want to provide coverage to companies. If your company’s EMR is bad, meaning its actual losses are greater than average industry losses, its Workers’ Compensation policy could be dropped. Should this happen, our brokers will be prepared to pair you with a policy in as little as a day. If your company’s insurance was canceled because of a bad EMR, it will be important to focus on improving safety measures in the workplace. You can do this by increasing training procedures for employees. Offering transitional jobs to injured workers can reduce your company’s actual losses due to occupational injuries so that its EMR is less affected by workplace accidents, even when they do occur.

For more information about getting coverage for your business, call the Workers’ Compensation insurance brokers at NPN Brokers today at (561) 990-3022.

Can My Workers’ Comp Coverage Be Dropped Because of a Bad EMR Rating?

Experience modification rates are metrics used by insurance companies to set Workers’ Compensation premiums for businesses. But what if you have a bad EMR? Can your coverage be dropped?

Unfortunately, the answer is yes. If your company’s EMR has dropped significantly over the last year, your carrier might be unwilling to renew your company’s Workers’ Compensation policy. This is because EMRs indicate a company’s risk to insure compared to the rest of its industry. If your company is an exceptional risk to insure, as indicated by its EMR, your Workers’ Compensation carrier might not want to be on the hook for future claims.

A Workers’ Compensation carrier can be made aware of a company’s poor EMR in several ways. For example, an increase in Workers’ Compensation claims is likely to worsen a company’s EMR. Carriers can estimate EMRs themselves by dividing a company’s losses by the expected losses of its industry. Bad EMRs increase the likelihood that Workers’ Compensation carriers will have to pay out benefits to injured employees. Even if your coverage is not dropped because of a bad EMR, your premiums might increase to reflect the heightened risk of insuring your company.

Workers’ Compensation policies are typically renewed annually. At the end of the year, your carrier will review your company’s losses due to Workers’ Compensation claims and decide whether or not its current premiums are still appropriate. If a bad EMR is part of the equation, your policy might not be renewed.

Tell our Workers’ Compensation insurance brokers if your policy was dropped because of a bad EMR. Our brokers have experience finding coverage for high-risk companies quickly so that they can avoid the various consequences that often come with non-compliance.

What is a Bad Workers’ Comp EMR Rating?

As an employer, it is important to familiarize yourself with experience modification factors and what yours might mean. So, what is a bad Workers’ Compensation EMR?

Let’s start by reviewing what an EMR is. An experience modification rate indicates a company’s risk to insure based on how it compares to other companies in a similar industry and of a similar size. A bad EMR might be anything above 1.0. For example, suppose your company’s actual losses due to occupational illnesses and injuries for the past few years were $5,000. Then, suppose the expected losses for a company of a similar size and industry should be $3,000 over that same time period. In that case, your company’s EMR would be 1.6. To get that number, you would divide your actual losses by the expected losses.

Now, let’s flip that equation around. If your company’s actual losses were below its expected losses, your company’s EMR would be good. For example, if your actual losses were $3,000 and industry losses were expected to be $5,000, your experience modification rate would be 0.6. Because its rating would be lower than the average, 1.0, it would have a good EMR and would not be at risk of having its Workers’ Compensation policy dropped.

What to Do if Your Coverage is Dropped Because of a Bad EMR Rating

If your company’s Workers’ Compensation policy was dumped because of a bad EMR, or its coverage is at risk of being canceled, there are a few things you can do to rectify the situation. Begin by increasing safety training and safety programs in the workplace. To lower your company’s actual losses and its overall experience modification rate, consider offering transitional jobs to employees to get them back to work sooner following a workplace accident.

Increase Safety Training

When bad EMRs lead to companies losing their Workers’ Compensation coverage, increasing safety training might help them get back on the right track. By ensuring your employees are trained properly, you can reduce the number of workplace accidents. Over time, as your company’s number of occupational injuries drops below the average for its industry, your company’s EMR should improve, making it easier to find new Workers’ Compensation.

Offer Transitional Jobs

Actual losses are crucial to calculating experience modification rates. Companies can reduce their losses due to Workers’ Compensation claims by offering transitional jobs to injured employees. Transitional jobs can allow employees to return to work, most likely at a lower earning capacity. Still, their Workers’ Compensation lost-wage benefits should be reduced, ultimately reducing your company’s actual losses from work injury claims. Having possible transitional jobs lined up just in case of a workplace accident can help you prevent your company’s EMR from being substantially impacted.

Call NPN Brokers to Get Workers’ Comp Insurance Today

Call our Workers’ Compensation insurance brokers at (561) 990-3022 to get help from NPN Brokers today.