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Cost & Pricing Definitions Leadership & Culture Most Popular Safety Best Practice

Your Ultimate Guide To Experience Modification Ratings (EMR)

After labor and materials, insurance is the third highest cost for a construction company.  That’s why it’s important to understand — and monitor — your experience modification rating (EMR).   EMR has a direct correlation to how much you pay in Workers’ Compensation Premiums. The lower your EMR, the less you pay in premiums.

But to be able to use your EMR to effectively control costs, you must first understand how it works.

What is an EMR?

In a nutshell, your EMR compares your workers’ compensation claims experience to other employers of similar size operating in the same type of business.

It’s the method for tailoring the cost of insurance to the characteristics of a specific business, but it also gives that business the opportunity to manage its own costs through measurable cost-saving programs.

How is EMR Calculated?

The actual process of calculating the EMR is sometimes complex, but the purpose of the formula is pretty straightforward. Here’s how it works: your company’s actual losses are compared to its expected losses by industry type. Factors taken into consideration are company size, unexpected large losses and the difference between loss frequency and loss severity.

EMR usually takes into account three years of claims history, excluding the most recent policy year. For example, the EMR for a policy period beginning January 1, 2018, includes claim costs for the policy periods beginning:

  • January 1, 2014
  • January 1, 2015
  • January 1, 2016

Who Gets Assigned an EMR?

Not every business is large enough to have an EMR.  Your workers’ compensation premium has to be above a certain dollar threshold specified by your state before your organization will be assigned an EMR. This minimum premium amount is usually around $3,000-$7,000.

What are EMR Classifications?

A workers compensation classification represents a group of employers that conduct similar types of businesses.  Classifications are usually represented by four-digit codes.   Examples of classifications are Roofing (5150) and Plumbing (5183).  All employers assigned to the same classification pay an identical rate (if they are located in the same state).

Classification systems are based on the idea that workers employed by similar businesses are prone to similar types of injuries. For example, employees who install roofs are subject to injuries caused by falls, burns, sun exposure, and lifting heavy objects. The types of injuries these workers sustain are relatively consistent from one roofer to another. Thus, all employers whose business consists of roofing installation are assigned to the same workers compensation classification.

Who Calculates Your EMR?

Your EMR is calculated by the National Council on Compensation Insurance (NCCI) or in some states, by an independent agency.

When the NCCI or a state bureau issues an experience modifier, the agency provides an experience rating worksheet. The worksheet shows how your modifier was calculated. It lists the relevant class codes and applicable payrolls, claim numbers and losses used in the calculations. Note that if you have incurred a large loss, only a portion of that loss is typically included in the calculation of your modifier. If you have incurred several small losses, all of those losses might be included in the calculation.

Pro Tip: Your modifier is generally more adversely affected if you have incurred numerous small losses rather than one large one.

How Does My EMR Affect my Premiums?

Your EMR represents either a credit or debit that’s applied to your workers’ compensation premium. An EMR of 1.0 is considered to be the industry average. While an EMR of more than 1.0 is a Debit Mod, which means your losses are worse than expected and a surcharge will be added to your premium. An EMR under 1.0 is a Credit Mod, which means losses are better than expected, resulting in a premium discount.

Here’s an example of how this works:

Premium

EMR

Modified Premium

$100,000

.75

$75,000

$100,000

1.00

$100,000

$100,000

1.25

$125,000

As you can see, an EMR of 1.25 would mean that insurance premiums could be as high as 25% more than a company with an EMR of 1.0.

How Can You Achieve & Maintain a Low EMR?

Of course, this is the question every business owner wants to know the answer to. So here is a list of things you can do to be more proactive when it comes to lowering your EMR:

  • Contact your insurance agent or review your policy documents to verify your current EMR is accurate. You might be paying more (or less) than you should due to incorrect or incomplete data.
  • Remember that EMR is influenced more by small, frequent losses than by large, infrequent ones. So the fewer losses you have, the better.
  • Create a strong, well-documented safety program that incorporates best practices such as toolbox talks, daily safety analysis, frequent site inspections, and safety training.
  • Use analytics to determine ways you can be proactive about injury prevention.
  • Also create or improve an effective return to work program to help lower your EMR.
  • Make sure that all injuries are reported promptly. Studies reveal that prompt injury reporting reduces the cost of claims.
  • Implement an active claims management program to manage outstanding reserves and focus on efficiently resolving open claims.
  • Train front-line supervisors and managers how to manage injured employees. Supervisors play a key role in managing the injury and recovery process. When there’s a good relationship between the injured employee and the supervisor, chances are you’ll get better results.
  • Practice due diligence during the hiring process. Hiring an employee who is not fit for the essential functions of the job will increase the risk of an injury. Of course, you’ll want to take the appropriate, and legal, steps in your “screening” process.

Harness Can Help Your Company Lower Your EMR & Save Money

If you want a stronger health and safety program with better documentation and more efficient workflows, Harness is your answer.

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Safety Best Practice

Your Ultimate Guide To Toolbox Talks

Toolbox talks are short, informal meetings for field personnel to discuss hazards and safe work practices.  They are commonplace in the construction industry. Most often held weekly, they allow foremen and supervisors to keep safety top of mind amongst their workers.

Toolbox talks are also a key piece of safety due diligence and they are often provided as evidence when a company is defending themselves from OSHA. General Contractors often request subs submit these records to them as well.

If you’re like most companies doing toolbox talks, you’re probably doing them on paper. This can bring a number of issues into play such as;

  • Difficulty finding good meeting topics
  • Difficulty distributing content to remote workers
  • Lack of timeliness in workers returning completed talks
  • Poor quality of the records produced. Missing info, signatures, etc…
  • Harder to locate historical records when you need them most

And let’s not forget how much construction workers hate to do paperwork. This can lead to a lack of participation in your safety process and ultimately to more risk.

Harness makes conducting & documenting toolbox talks fun and easy:

  • Hundreds of topics in both English & Spanish that can be sent directly to your team each week
  • Capture all the important information about attendees including signatures right from a smartphone.
  • Instant visibility of safety program participation via our customized dashboards.
  • Easily access historical records by project, crew, topic, or person.
  • Share professional looking PDF copies with your GC or customers with a few clicks.

Harness developed our toolbox talk feature in collaboration with contractors. We’ve found a way of mimicking what was typically done on paper while removing the inefficiencies and strengthening the records produced. With Harness, your team will be completing their toolbox talks quickly and easily. You’ll know that this essential piece of safety due diligence is getting done and getting right.

To find out more about how Harness makes toolbox talks better, book a demo today.

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Leadership & Culture Safety Best Practice

How KPost Roofing Uses Harness

KPost Roofing & Waterproofing was recently named 20th overall on the Top 100 Roofing Contractors list. The Dallas company also has the enviable title of “Official Roofer Of The Dallas Cowboys” and 2017 Contractor Of The Year. Founded in 2003, the company has grown to over 400 employees and a whopping $65M in annual revenue.

KPost founders Keith Post, Steve Little, and Jayne Williams worked for another local roofer and struck out on their own with a philosophy of creating exceptional customer experiences and a company culture based on respect & support. That philosophy continues to this day and the results speak for themselves.

The Problem

KPost has dedicated health & safety staff that provide training & coaching but they were struggling to get participation from field staff, manage paperwork, and know where they should be focusing their time & attention. This led to a higher risk of incidents.

The Harness Solution

Harness worked with KPost to create customized electronic forms for job site hazard analysis, safety inspections, incident reports, and more. Coupled with our toolbox talks, training records management, and document storage features, KPost now has a single place to house all of its safety program information. All their safety stuff can be accessed anytime, anywhere from any device.

Field staff complete a weekly toolbox talk based on a topic sent out by the safety staff via Harness. They also complete a daily job site hazard analysis that covers how to avoid the risks that they might experience that day. Safety staff follow up with safety inspections to verify that safe work practices are being used.

All information submitted into Harness is fed into custom dashboards that show KPost management insights such as;

  • Who is & isn’t participating in the program
  • At what the rate are safety deficiencies occurring on their job sites
  • What types of deficiencies are occurring along with their severities

The Results

KPost had a few objectives when they chose to use Harness to better manage their safety program.

  • Reduce time spent on administration
  • Increase safety program participating & compliance with policies
  • Lower risk & workers compensation premiums

One year into their Harness deployment, KPost has achieved the first two objectives. They expect to achieve the third in the next two years as Harness provides the intelligence they need to further strengthen their culture of safety. For KPost, even a small reduction in their EMR will provide them with hundreds of thousands of dollars of savings each year.

“Harness helps our team complete their safety tasks easier and provides me as an owner real-time views of what’s going on. Harness is also helping us fulfill our goal of keeping our workers returning safe to their families each night.” – Steve Little, President of KPost

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