Workers’ compensation is a crucial insurance policy for businesses that covers medical expenses, lost wages, and rehabilitation costs for employees who suffer a work-related injury or illness. However, the premium for workers’ compensation insurance can vary from business to business, and one of the key factors that influence the premium is the experience modification factor (EMF).
What is the Experience Modification Factor?
The experience modification factor is a number that reflects a business’s history of workers’ compensation claims and losses. The EMF compares the business’s actual losses to the expected losses for businesses in the same industry with similar payroll. A business with a lower than expected number of claims and losses will have a lower EMF, which translates into a lower premium for workers’ compensation insurance.
How Our Insurance Agency Reviews the Experience Modification Factor
At our insurance agency, we review our clients’ experience modification factor every year to ensure that there are no errors that could lead to an aggravated inequity. An aggravated inequity occurs when a business’s EMF is higher than it should be due to errors in the claims history data. By reviewing our clients’ EMF, we can identify any errors and work to correct them, which can result in significant cost savings for our clients.
The Importance of the Experience Modification Factor
The experience modification factor is an important factor in determining the cost of workers’ compensation insurance for businesses. By controlling their EMF, businesses can lower their premium for workers’ compensation insurance, which can result in significant cost savings. One way to control the EMF is by keeping claims medical only, which means that the employee is not out of work for an extended period of time. Medical-only claims are less expensive than claims where the employee is out of work, which can help to lower the overall claims history for a business.
In conclusion, the experience modification factor is a crucial factor in determining the cost of workers’ compensation insurance for businesses. At our insurance agency, we review our clients’ EMF every year to ensure that there are no errors that could lead to an aggravated inequity. We also work with our clients to control their EMF by keeping claims medical only, which can result in significant cost savings for businesses. By understanding and controlling the EMF, businesses can better manage their workers’ compensation costs and protect their bottom line.
