Determining Costs for Workers' Compensation Insurance and How to Control Them

Workers Compensation Insurance is a necessary and crucial aspect for protecting employees in the event of work-related injuries or illnesses. It offers medical benefits, wage replacement, and other resources for injured workers while also safeguarding the business from costly lawsuits. An essential component to determining the costs for workers’ compensation insurance is the experience modification rating (EMR).

An EMR, also known as an “experience mod” or “e-mod,” is a numerical value given to an employer after past workers’ compensation claims have been compared to other similar-sized and similar industry employers.

What Factors Affect EMR

EMR is influenced by factors such as an employer’s claim history, payroll size, and industry. The quantity and costs of previous claims play a large role when assessing the EMR of a business. Furthermore, a larger payroll means more opportunities for higher exposure to potential claims. The type of industry also contributes to the evaluation of the variety of risk exposures employees face in day-to-day work activities.

Strategies to Control EMR

By proactively implementing different risk management strategies, employers can help to influence their EMR positively. Through the continuous monitoring of their risk management strategies, employers can expect to see an improvement in safety records, reduce the frequency and severity of claims, and lower their EMR. A lower EMR translates to reduced premium costs for their workers’ compensation insurance, which, in turn, saves the business money.

1. Introduce a Robust Safety Program: A safety program aims to prevent accidents and injuries in the workplace. The incidence of workplace injury can be reduced simply through implementing safety measures, properly training employees on procedures, and enforcing safety protocols. 
2. Active Involvement in Claims Management: Approaching claims resolution proactively accelerates the claims closure process and aids in reducing costs. Quickly reporting incidents will lead to early intervention and prevent costs from escalating. Maintaining accurate documentation assists in defending against fraudulent claims. Overall, active participation in claims management allows employers to reevaluate safety measures and employ new protocols to prevent future claims. 
3. Implement a Return-to-Work Program: Implementing a return-to-work program with the necessary accommodations for the injured employee allows for a smooth return to work. This method allows for the timely return of the employee, which reduces the duration of disability, minimizes wage loss, and encourages faster recovery. Insurance carriers understand the benefits of return-to-work programs and view them as a staple risk management practice thus contributing to lower EMR.

Stay Ahead of Losses

Implementing risk management solutions is vital when it comes to cutting insurance costs. Knowing where to start can be challenging; however, Gilsbar offers the resources and guidance for employers. Interested in learning more about Gilsbar risk management solutions and workers' compensation insurance offerings? Contact us at 1.800.906.9654 or visit gilsbar.com/contact-us.