Although a company’s Emod is a single number, an analysis of your payroll and loss data functions in the experience rating formula can provide deeper insight. Emod calculations vary by state, but generally depend on the following components:

*  Actual losses from the three prior policy periods, not including the most recent policy period;

*  Expected losses based on payroll and expected loss rates for the industry;

*  The amount of each loss, i.e., its severity;

*  Whether the loss is medical-only, without temporary or permanent disability; and

*  Other values deemed important by your individual state. 

 

Why does this base rate matter so much to the timber industry? 

A company with an Emod of 1.0 would neither be punished nor rewarded for their losses and their premium would not be affected by the Emod. If two companies have a payroll of $200,000 and one company has very few losses compared to the other company who has a tremendous amount of losses, the savings can be substantial. In terms of premium, the company that sustained far less losses could potentially save $40,000 per year on insurance premium based solely on the worker’s compensation. 

 

In order to facilitate premium savings, insurers often offer services such as risk management audits, safety trainings, claims management programs, hiring technique strategies, and company analysis aimed at identifying opportunities for improvement. -