International Door & Operator Industry

MAR-APR 2018

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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Page 87 of 142

V O L U M E 5 1 I S S U E 2 A P R I L 2 0 1 8 85 Experience Modification Rating (EMR) has a strong impact upon all IDA members' businesses. Experience modifications are called by many different names including: 1. E–Mod 2. Ex Mod, and, most of all, 3. Experience Rating It is a number used by insurance companies to gauge both past cost of injuries and future chances of risk. The lower the EMR of your business, the lower your worker compensation insurance premiums will be. An EMR of 1.00 is considered equivalent to the industry average and is at "unity." If your business has an EMR greater than 1.00 it means that there generally has been a worker compensation claim that your insurance provider has paid. The bad news is this increased EMR sticks with you and affects your premiums for 3 years. An experience modification factor greater than 1.00 means the employer experienced worse than expected losses during the rating period, while a mod of less than 1.00 indicates the employer's losses were better than expected for the rating period. How are Experience Modification Rates calculated? 1. The base premium is calculated by dividing a company's payroll in a given job classification by 100, and then is multiplied by a 'class rate', which is determined by the National Council on Compensation Insurance (NCCI) reflecting the inherent risk in that job classification. For example, construction workers have an inherently higher risk of injury than receptionists, so their class rate per $100 of payroll is significantly higher. 2. A comparison is made of past claims history to those of similar companies in your industry. If and IDA member had a higher-than-normal rate of injuries in the past, it is reasonable to assume that your rate will continue to be higher in the future. Insurers examine your history for the three full years ending one year before your current policy expires. For example, if an IDA member receives a quote for coverage that expires in January 2017, the experience modification will be calculated based on 2013, 2014 and 2015 workers compensation losses/claims. 3. NCCI has developed a complicated formula that considers the ratio between expected losses in your industry and what your company actually incurred, as By Andrew Stergiou Continued on page 86 EXPERIENCE MODIFICATIONS ASSOCIATIONNEWS

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