The Experience Modification Rate (EMR) is a metric used by insurance companies to gauge both past cost of injuries and future risk. It is a multiplier applied to your workers' compensation insurance premiums. An EMR of 1.0 is considered the industry average. If your score is lower than 1.0, you are considered safer than average, resulting in lower premiums. If it is higher than 1.0, your premiums will increase.
How to Calculate EMR: The Formula
In its simplest form, the calculation follows this logic:
EMR = (Actual Losses) / (Expected Losses)
While the National Council on Compensation Insurance (NCCI) uses a more complex formula involving "Primary" and "Excess" losses to minimize the impact of a single catastrophic claim, the fundamental ratio compares your actual claim history against companies of a similar size in your specific industry class code.
Example Calculation
Metric
Value
Total Payroll
$1,000,000
Expected Losses (Industry Avg)
$25,000
Actual Incurred Losses
$18,000
Calculation
18,000 / 25,000
Final EMR
0.72
Understanding Your EMR Score
Below 1.0: You have a "credit mod." You are performing better than average and receive a discount on your premiums.
1.0: You are exactly at the industry average. No discount or surcharge is applied.
Above 1.0: You have a "debit mod." You are performing worse than average, and a surcharge is added to your premium.
Why EMR Matters for Your Business
Beyond insurance premiums, EMR is a critical safety benchmark. Many government and private contracts require contractors to have an EMR below 1.0 to even bid on a project. A high EMR suggests a poor safety culture, which can lead to lost business opportunities and decreased employee morale.
function calculateEMR() {
var actual = document.getElementById('actualLosses').value;
var expected = document.getElementById('expectedLosses').value;
var resultDiv = document.getElementById('emr-result');
var scoreSpan = document.getElementById('emr-score');
var interpretation = document.getElementById('emr-interpretation');
// Validation
if (actual === "" || expected === "" || parseFloat(expected) <= 0) {
alert("Please enter valid positive numbers for both fields.");
return;
}
var actualVal = parseFloat(actual);
var expectedVal = parseFloat(expected);
var emr = actualVal / expectedVal;
// Round to 2 decimal places
emr = Math.round(emr * 100) / 100;
scoreSpan.innerHTML = emr.toFixed(2);
resultDiv.style.display = "block";
// Interpretation Logic
if (emr < 1.0) {
resultDiv.className = "good-rating";
interpretation.innerHTML = "Excellent! Your EMR is below the industry average. This indicates a strong safety program and will result in a discount on your insurance premiums.";
} else if (emr === 1.0) {
resultDiv.className = "average-rating";
interpretation.innerHTML = "Average. Your safety performance is exactly in line with the industry standard. Your premiums will not be adjusted up or down.";
} else {
resultDiv.className = "bad-rating";
interpretation.innerHTML = "Warning. Your EMR is above the industry average. This will cause an increase in your workers' compensation premiums and may disqualify you from certain bidding opportunities.";
}
}