EMR Letters

What are EMR Letters?

An Experience Modifier Rate (EMR) is a number used to gauge a construction company's safety metrics. This number is calculated by using your company's historical cost of injuries and potential future risks. A company's EMR is then compared to the average losses of other employers in your state in the same industry. An EMR letter is a letter issued by your company's insurance provider that details your company's experience modification rating.

How is the Experience Modifier Rate Calculated?

EMRs are calculated by advisory organizations, the most common of which is the NCCI (National National Council on Compensation Insurance). In fact, the NCCI developed the formula for calculating EMRs. This formula considers your company size, history of workplace injury over a three-year average, and the rate of incident for other companies in your industry. For every industry, the average EMR is 1. If you have a rating higher than 1, then you have a higher than average rate of injury and you will be charged a higher workers’ compensation insurance premium. If you have a rating lower than 1, then you have a lower than average rate of injury and you will be charged a lower workers’ compensation insurance premium.

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What is an EMR Letter used for? 

Contractors will sometimes be asked for an EMR letter from a new client before beginning a contract. You will also need to submit an EMR letter for most pre-certification services, including ISNetworld® and Avetta®.

An experience modification rating is a number that communicates your company’s history of workplace injury in comparison to other companies in your industry. In short, this EMR letter helps organizations and potential clients get an idea of how safe and how compliant your business is. 

When companies look at your EMR letter, they are commonly looking for an EMR that is lower than 1. More often than not, reputable hiring organizations avoid hiring contractors with EMRs that are greater than 1, as this communicates a somewhat unsafe work environment. What’s more, a high EMR will negatively affect your certification score through online pre-qualification companies.

How Do I Get My EMR?

To receive an official EMR, you must submit your company information to the proper advisory organization. The NCCI® is the most popular Advisory Organization, and they provide worker’s compensation advisory services to 33 states. However, advisory organizations can vary from state to state. If your company is in California, Delaware, Indiana, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Texas, Washington State, Wisconsin, or Wyoming, you will need to communicate directly with your state insurance rating organization.

Also, bear in mind that some contracting companies do not qualify for an EMR. If your company is younger than three years, then it is impossible to calculate your EMR as this formula considers a three-year average. Moreover, some companies are too small or have too low of an insurance premium, making it statistically impossible to calculate an EMR. If any of the above cases apply to you, then you will need to instead provide a letter explaining your circumstances to your hiring client.

Obtaining Your EMR Letter

When a hiring client asks for your company EMR letter, you can give them a letter from your insurance agent or a copy of your EMR worksheet from your insurance advisory organization (NCCI or state-specific).

If your company has recently been experience rated, then the simplest method is to contact your insurance agent for a copy of your up-to-date EMR letter.