Resources & Insights

Case Study: Workers’ Compensation Rates — A Game of Inches

October 4, 2018

The Challenge: “Football is a game of inches and inches make the champion.” That’s something the great Vince Lombardi used to say and it’s a point with parallels in the workers’ compensation world. To be clear, we’re talking about your experience modification rate, or EMR, a topic that we’ve addressed here in the past but which deserves closer scrutiny. Like football, even small advances on the EMR field can make a difference, and sometimes a really big difference. In this case, our client’s EMR was OK. In fact, it was lower than its industry average. But since when was “OK” ever going to excite anyone?

Our Solution: Before we get too far, remember that no one wants an EMR higher than 1.00. An EMR, as a refresher, is that ratio that expresses actual to expected losses that occur over a (typically) three-year period. The short of it is that higher EMRs mean higher premiums. Our client’s EMR, also known as an e-mod, was 0.97. Digging into its risk-management program, we discovered that its approach to safety training wasn’t as robust as it could be. Our client simply wasn’t doing as much as it could to train its employees, especially those new to the job. Studies have shown that workers with less than a year of experience are those most likely to get hurt. Armed with that realization, our client soon introduced a new approach to mentoring its new hires. We also took a hard look at its deductible and, based on our analysis, helped the client see how a higher deductible could actually save it thousands of dollars a year in premiums.

The Outcome: How does an EMR of 0.61 sound? Good, right? How about a premium reduction of nearly 50%, thanks in part to lower rates as well as significant dividend checks flowing from its carrier? Even better, right? In hard numbers, we’re talking about going from $325,000 a year to under $160,000 in workers’ comp insurance costs. This isn’t just about saving money, by the way. When the economy slows, as it invariably will, general contractors will be able to be more selective about who they bring aboard as their subcontractors. The easy prediction? Subs with lower EMRs will definitely win the game.

Want to learn more? Contact CCIG VP Michael Kline at or 720-212-2042.

CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.

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