California EMR Calculator

Below is a California EMR calculator, also known as Mod, or  Experience Modification Rate. An EMR is a rate assigned to qualifying companies for loss comparison to other companies in the same industry.  An EMR of 1 means that losses are equal to the industry average.  Above 1 means that the company losses are above the average loss rate (Bad), and below 1 means the company has less than the average loss rate (Good).

This Mod Calculator is based on the ELR and D-Ratio’s provided by wcrib.com (The official Insurance Actuary for the state of CA). You can view their exact ERM formula at wcrib.com.

California EMR Calculator

Experience Modification Rate – Basic Formula

What you need for the EMR Calculation:

  • You will need to be eligible. To be eligible for an EMR rate in the state of California, a company must have a sum at least $30,300 in premium. This is because a single claim can have a far more significant impact on the loss ratio for a small company compared to a larger company.
  • You will need a loss run report for the last 3 completed policy years. Current policy years are not eligible for the EMR calculation.
  • You will need a payroll by class code report. Total payroll amounts per class code will be needed to calculate the ratio of losses per class code.

Steps for the California EMR Calculator:

Below are the steps to fill out the EMR Calculator:

  1. In the first column, titled “Code”, enter the companies WC class code(s). You may select the code from the drop down menu, or enter it yourself. Columns B & C should automatically fill in the ELR and Discount Ratio’s.
  2. In the fourth column, titled “Payroll”, enter the gross payroll amount per WC class code. Columns E & F should automatically fill in the expected & primary losses those class codes.
  3. In the seventh column, titled “Act Inc Loss”, enter the actual incurred losses. You will find this information on the loss run report. This total should include paid and reserved medical losses, with a maximum of $175,000 per claim. Legal expenses are not included in the EMR rating. Any amount above $175,000 for a single claim will not be included in the EMR calculation.
  4. In the eighth column, titled “Act Prim Loss”, enter the actual primary losses. This will be the first $7,000 of each individual claim. Example: If you had two claims $8,000 each, your actual primary losses will be $14,000 and actual incurred losses will be $16,000.

 

EMR Rate Overview:

  • Excellent: 0.40 – 0.75
  • Good: 0.76 – 0.99
  • Industry Average: 1.00
  • Average to at-risk: 1.01 – 1.25
  • At-risk to adverse projections: 1.26 – 200

Keep in mind:

  • Actual EMR Rates provided by the state of California weight losses differently depending on the type of injury, and status (Open/Closed). For the simplicity of the user, this formula does not consider those factors.
  • Official state mod rates also include a sliding scale of weight to apply towards EMR rates depending on the amount of claim, the ratio of medical paid and reserved, etc. For the simplicity of the user, this formula does not consider these factors.
  • Certain claim types might be considered an “outlier”, depending on type of injury or the size of the claim. If considered to be an outlier, that claim will not be calculated towards the EMR rating.

CALIFORNIA EMR CALCULATOR