Experience Modification Rate (EMR) Problems
Green Flag Safety is a consulting business in the petrochemical industry based in Friendswood, Texas. We provide pre-qualification assistance for service companies bidding contracts in the petrochemical industry. We assist our customers in navigating the pre-qualification process, meeting requirements for hiring clients, OSHA compliance and jobsite safety in Texas, as well as third-party vetting portals.
Today’s topic is problems associated with an Experience Modification Rate (EMR), which can affect your scoring. The following discussion explains the typical areas where EMR problems can occur, solutions to EMR problems, and how Green Flag Safety can help our clients navigate these problem areas.
Claim data is provided to the Rating Organization by individual worker’s compensation insurance companies an employer may have had during their experience period. This information includes paid and reserve amounts established for any given claim. Claim data must be reported to the Rating Organization within particular time frame guidelines, with established cut-off dates.
Medical only claims are typically discounted, and large claims are capped. When the claim data is incorrect, when there is over-reserving, poor claim handling, or if the information is not reported within the required time-line, an error will occur in the EMR.
Classification codes must match on the employer’s experience rate calculation and their policy. Each classification code which applies to an employer’s worker’s compensation program has its own unique rating factors. Factors which produce an employer’s expected losses are a major part of the experience rating calculation. An incorrect classification code will skew the calculation, and lead to an incorrect EMR.
Payroll and Remuneration must have properly assigned payroll to the correct classification code to produce the correct expected losses in the formula. If payroll is incorrectly reported by the insurance company, or the company has not correctly reported an adjustment due to an audit dispute, the EMR will be wrong.
ELR and D-Ratios are specific classification code rating factors. They are different for each code, for each state, and for the most part, every year. If incorrect EMR and/or D-Ratios are utilized, the EMR will not be correct.
Spit Point is the numerical point in claim data, where claims are split into primary and excess losses. Experience rating formulas are designed to discount large shock type or severe claims and emphasize frequency problems. Primary losses are more heavily weighted in the formula. Split point changes effect premiums, and incorrect split points will result in an incorrect EMR.
The Incorrect Combination of Entities can result in costly problems. Specific rules govern actions taken and the effect combining entities and changes of ownership will have on an EMR. When two or more entities combine common ownership, the experience of both are utilized to calculate a common EMR.
Solutions to EMR problems include having a Claim Review conducted, A Classification Code Review, a Worker’s Compensation Audit Review, and an Experience Modification Review. These types of reviews can typically be requested from your Workers’ Compensation carrier.
That’s where Green Flag Safety comes in! We can help with ISNetworld ®, Avetta, Veriforce, ComplyWorks, DISA, NCMS, or other third-party auditors. We assist with construction site safety, equipment safety service, safe work plans, and construction safety consulting, among our many services. Reach out to us; and let us relieve you of time consuming and challenging verification process tasks, allowing you to focus on your business.