Category : Insurance Agencies
When it comes to workers’ compensation coverage, you may have heard the experience modification rate reference. The EMR directly affects your insurance premiums, but many business owners know little about how the ex mod calculation works. The following breaks down the ex mod rate so you can grasp its impact on your rates.
An ex mod rate is the rating modifier that workers’ compensation adjusters use to incentivize you to keep a safe workplace. When you see your ex-mod rate, it will be expressed as a percentage based on your company’s claims or loss history.
Industries have a base rating, represented by 100%. Your ex mod may be higher or lower than that percentage. If your rating is higher, you have a debit, if below, you have a credit. To calculate your ex mod, the size of your business, your expected losses and your industry is taken into account. Your EMR is important because it can increase or reduce your workers’ compensation premium costs.
Lowering Your EMR
If you want to lower your EMR, you have to lower the number of incidents in your business. For example, if you have a high rate of accidents, you will have a higher ex mod rate. To prevent accidents, invest in a risk mitigation program and ensure that you have safety plans in place to help with accident prevention.
When it comes to your workers’ compensation costs, you need to consider your ex mod. When your EMR is low, so are your premium costs.