Experience Modification Rating (EMR / Mod Rate)
An experience modification rating, often called a mod rate or EMR, is a numeric factor (with 1.00 as the industry average) used to adjust a business's workers' compensation premium based on its actual claims history compared to similar businesses in its industry. A rating below 1.00 lowers premium, above 1.00 raises it. The Allen Thomas Group helps contractors and other high-risk businesses understand and actively manage their EMR, since it directly affects both cost and the ability to bid certain jobs.
How the Rating Is Calculated
The EMR compares a business's actual workers' comp losses over a set period (typically the three most recent completed policy years, excluding the most recent) against expected losses for businesses of similar size and industry classification, using data compiled by rating bureaus like NCCI or a state's equivalent. Frequency of claims typically weighs more heavily than the severity of any single large claim, which is intentional: it rewards businesses with fewer incidents overall, not just businesses that got lucky and avoided one catastrophic claim.
What a Rating Actually Does to Premium
| EMR | Effect on Premium | What It Signals |
|---|---|---|
| Below 1.00 (e.g., 0.85) | Premium discount | Better-than-average claims history |
| 1.00 | No adjustment | Average for the industry |
| Above 1.00 (e.g., 1.25) | Premium surcharge | Worse-than-average claims history |
Why This Matters Beyond Just Premium
Many general contractors and government agencies set a maximum acceptable EMR (often 1.00 or lower) as a prequalification requirement before a subcontractor can even bid a job, meaning a high mod rate can lock a business out of work entirely, not just cost more in premium. Because the calculation uses a rolling multi-year window, a single bad claims year can suppress a business's competitiveness for several years afterward, which is why active safety programs and prompt claims management matter well beyond the immediate policy term.
How The Allen Thomas Group Can Help You
We'll help you understand exactly how experience modification rating (emr / mod rate) affects your coverage and cost, then shop your policy across 15+ A-rated carriers to find the right fit.
Get a Precise Quote