EMR directly affects your workers comp premium and bid eligibility. Learn how it is calculated, what a good EMR is, and how to lower yours.
Last updated: April 2026
Your experience modification rate is the single number that most directly affects what you pay for workers' compensation insurance every year. An EMR of 0.80 means you pay 20% less than the industry baseline. An EMR of 1.30 means you pay 30% more. For a contractor with a $200,000 base premium, that is a $100,000 annual swing.
Experience Modification Rate (EMR) is an insurance rating metric that compares your company's workers' compensation loss experience to the average for businesses of similar size and industry classification. It is calculated by the National Council on Compensation Insurance (NCCI) or your state rating bureau using three years of claims data.
Experience Modification Rate is the insurance industry's way of adjusting your workers' compensation premium based on your actual claims history. Instead of charging every roofing contractor or every electrical subcontractor the same rate, the system compares your loss experience to the expected losses for businesses of your size and classification.
The result is a single number, your EMR (also called an experience mod, e-mod, or modification factor), that multiplies your base premium up or down.
For construction contractors, EMR typically ranges from about 0.60 (excellent safety record) to 2.0 or higher (poor claims history). The average is 1.0 by design.
The NCCI (National Council on Compensation Insurance) calculates EMR for employers in 38 states. The remaining states use their own rating bureaus (California, New York, New Jersey, Pennsylvania, Delaware, and others).
The calculation uses a three-year window of claims data, excluding the most recent policy year. For example, an EMR effective in 2026 uses claims data from the 2022, 2023, and 2024 policy years.
The full NCCI formula is complex, but the core concept is straightforward:
EMR = Actual Losses / Expected Losses
Where:
The formula is more nuanced than a simple ratio because NCCI applies different weights to primary losses (which are fully counted) and excess losses (which are partially counted). This weighting is the reason claim frequency matters more than severity.
The NCCI formula caps the primary loss amount per claim at a set dollar threshold (the "split point," which NCCI adjusts periodically). Every dollar of a claim below that threshold counts fully as a primary loss. Every dollar above it is discounted as excess loss.
This means five $10,000 claims ($50,000 total) will hurt your EMR significantly more than one $50,000 claim. Each small claim contributes its full amount as a primary loss. The single large claim has most of its cost treated as excess and partially discounted (NCCI, ABCs of Experience Rating).
The takeaway for contractors: preventing frequent small claims (sprains, strains, cuts requiring stitches) has a bigger impact on your EMR than preventing one catastrophic injury.
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Get Early Access →EMR is a direct multiplier on your base workers' compensation premium. The math is simple:
Annual WC Premium = Base Premium x EMR
For a contractor with a base workers' compensation premium of $150,000:
Over the three-year policy window that EMR reflects, the cumulative difference between a 0.75 EMR and a 1.50 EMR on a $150,000 base premium is $337,500. For contractors with larger payrolls, the numbers scale accordingly.
Insurance cost is only half the EMR story. The other half is access to work.
Many general contractors, owner-operators, and prequalification platforms (ISNetworld, Avetta, ComplyWorks) require subcontractors to submit their EMR as part of the prequalification process. Common thresholds:
An EMR above the threshold means your bid is rejected before anyone reviews your scope, pricing, or qualifications. The financial impact of a high EMR extends far beyond the insurance premium itself.
Since EMR is driven by claims frequency and severity over a three-year window, lowering it requires a sustained effort, not a quick fix. The changes you make today will show up in your EMR 12 to 24 months from now.
For a detailed look at how EMR affects construction contractors specifically, see our EMR in construction guide.
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Get Early Access →An EMR below 1.0 is considered good because it means your claims experience is better than the industry average. For construction, an EMR between 0.70 and 0.90 is strong. Many general contractors require subcontractors to have an EMR below 1.0 to prequalify for projects. EMRs below 0.75 are typically achieved by contractors with robust safety programs and low claim frequency over multiple years.
EMR uses a three-year rolling claims window, excluding the most recent year. Safety improvements made today will begin affecting your EMR approximately 12 to 24 months later as the older, higher-claim years cycle out of the calculation window. Significant EMR improvement typically takes two to three years of sustained effort.
The National Council on Compensation Insurance (NCCI) calculates EMR for employers in 38 states. The remaining states use independent rating bureaus: California (WCIRB), New York (NYCIRB), New Jersey, Pennsylvania, Delaware, and a few others have their own systems. Your insurance agent or broker can provide your current EMR worksheet.
A single large claim will impact your EMR, but not as much as you might expect. The NCCI formula splits claims into primary and excess components. Only the primary portion (capped at a set threshold per claim) counts at full weight. The excess portion is heavily discounted. This means five small claims of $10,000 each will typically raise your EMR more than one $50,000 claim.
Your EMR appears on the Experience Rating Modification Worksheet provided by NCCI or your state rating bureau. Your insurance agent or broker receives this document annually and can provide a copy. In NCCI states, you can also request your worksheet directly through the NCCI website. The worksheet shows the claims data, classification codes, and calculation details behind your rating.
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