Use Of EMR In Construction An Eye Opener
I read another recent article arguing against the use of the EMR in construction as a qualifier for new business ("Comp premium adjustment errors hurt construction companies: Expert" by Louise Esola in Business Insurance Oct 30, 2024). My first experience with this issue occurred during a workers comp emr audit 20 or so years ago. A client called me and asked if I'd review their new, renewal NCCI Experience Modifier for them. The only thing odd to me about the request was that we were only one year removed from their last full premium audit I had performed for them, and we recovered a substantial refund. I didn't think there would be much to "clean up," but of course I agreed to take a look.
Emergency Workers Comp EMR Audit
The tone of my discussions with the client were much more urgent this time. The new mod had gone up to a 1.01 from a .98 since the previous work comp audit, And, our second audit was successful finding data errors to reduce the EMR down to a .99 from a 1.01. I sent the client an invoice for a percentage of the savings (which wasn't much on this 2-point mod reduction). They were so happy though! Enough so that I asked why they seemed more excited about this relatively small refund compared to the large refund they received the prior year. My client informed me that they were faced with having to pull a crew from a project because their renewal emod had gone above a 1.00 and my work saved them a small fortune in revenue had they lost this project. That's when I learned about this use for the EMR in construction.
Not Just A Construction Industry Practice
The application of the workers EMR in construction bidding has spread through other industries. A few years after my initial exposure to this practice, I received a call from a CFO to personally thank me for the work I did identifying errors and reducing their workers comp EMR below a 1.00. This client is a transportation/relocation company that does a lot of commercial work. The CFO explained that they had always had the "right" contact at a large, Fortune 500 company whose business they wanted to win. But, their emod was too high for their proposals to be considered. However, with a new mod below the threshold their prospect maintained, my client had won a new, lucrative contract.
Unfairly Punished By NCCI EMR Reporting Rules
Using the EMR in construction and other industries lead to circumstances that are truly unfair to some great businesses who are very serious and good with safety management. For example, I reviewed a mod for a client that watched their workers comp EMR go over a 1.00 due to two motor vehicle accidents where their drivers were rear ended at stop lights. Both drivers filed work comp claims and the insurance carrier anticipated 100% subrogation on both (meaning the insurance carrier would recover all their money from the at-fault parties), but the claims had to remain on the mod until the subrogation process was complete and the money recovered. Of course that can take a long time, and who knows how much harm was done in the meantime.
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How Can I Reduce EMR?
If you are a business that must submit its experience modification rate for new business and your experience modification rate is approaching a danger zone, don't take it lying down. Keep in mind that workers comp emr errors DO happen and they can be costly. A mod is only as good as the data submitted to NCCI, and insurance companies do make mistakes that inflate the EMR in construction and other industries; inflating both experience mods and premiums. We can help reduce your EMR through our turnkey audit process and, if you like, advise how to keep it low in the future. Feel free to call or email if you have questions or would like a consultation.
Stuart Cytron, MBA has been published in trade journals such Construction Forum St. Louis and St. Louis Business Journal among others. You can read more about Stuart and how he developed a passion for helping businesses reduce work comp expenses on his website.
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