This metric, often shortened to experience mod or EMR, is a numerical representation used in workers’ compensation insurance to adjust premiums based on a company’s past safety performance. A value of 1.0 is considered the industry average; a number below 1.0 indicates better-than-average safety and results in a premium discount, while a number above 1.0 signals higher-than-average risk and leads to a premium surcharge. For example, a company with an EMR of 0.8 would pay 20% less than the standard premium, while a company with an EMR of 1.2 would pay 20% more.
The purpose of this adjustment is to incentivize employers to prioritize workplace safety and reduce the frequency and severity of employee injuries. By rewarding companies with good safety records and penalizing those with poor records, it promotes a safer work environment and reduces overall costs associated with workers’ compensation claims. Its implementation has historically been a driver for improved safety protocols and risk management strategies across various industries. It offers a tangible financial incentive for companies to actively manage their safety risks.