Experience Modification Rate (EMR) Demystified

October 13, 2020

In all likelihood your Experience Modification Rate(EMR) is being calculated by the National Council on Compensation Insurance (NCCI), which is currently the accepted standard in 39 out of the 50 states. It is also important to note that if your company meets the eligibility criteria for your state, the EMR calculated by NCCI will be mandatory for you to apply to your business.

What is NCCI?

The NCCI is the governing body responsible for the regulation of the EMR. Founded in 1923, the mission of the NCCI is to foster a healthy workers compensation system. In support of this mission, NCCI gathers data, analyzes industry trends, and provides an objective percentage modifier for insurance premiums based on loss payment history.

However, NCCI does not operate in every state. Click here to view the list of states where NCCI does not operate.


The NCCI has published a booklet entitled “ABCs of Experience Rating,” which is available on their website at www.ncci.com. This brochure explains the experience rating plan in great detail, and any employer new to the world of EMR would benefit from reading it.


Another useful resource for understanding your company’s EMR is to use an online EMR calculator. These online calculators will ask you to enter your 36-month history of losses, (payments for accident claims)in order to compute estimated rates. Since each state has its own EMR-related rules, your rates will vary depending on which state you work in. Claims history data takes into account the number of incidents, the type of incident (such as medical or time lost), and the amount paid out for each incident.


Since EMRs are calculated based on three years of company history, lowering your EMR requires a longer-term focus; and since the EMR is calculated by and for the insurance industry, it has a direct and measurable impact on the insurance premiums you pay.


 Status of Experience Rating

The status of an EMR is important because it is used to determine what state-approved rating values are being used in the calculation. There are three statuses:


  • Preliminary
  • Contingent
  • Final


If the status is preliminary, it means the NCCI does not have final approved rating values for the state(s). An EMR will be calculated using the previously approved rating values. 


A contingent EMR is issued when the NCCI is expecting an audited payroll and/or loss information, but has not received the information from the insurer by the time the EMR is produced. Once the NCCI receives the audited payroll and/or loss information, the EMR will be revised with the newly received experience data.


Lastly, when the NCCI has received the state’s final approved rating values, the EMR will be revised to indicate a status of final.


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