Lowering Your EMOD: A Strategic Approach to Reducing Risk Insurance Costs

For many employers, workers’ compensation insurance premiums are a significant cost of doing business. Yet few understand the pivotal role their Experience Modification Rate (EMOD) plays in determining those premiums—or how they can influence it.

In simple terms, EMOD is a numeric factor used by insurers to gauge your company’s historical workers’ compensation claims compared to industry averages. A score of 1.0 means your claims are on par with peers. Scores above 1.0 mean higher-than-average claims, leading to premium surcharges. Scores below 1.0 can qualify you for discounts.

Why Lowering Your EMOD Matters

• Lower Insurance Premiums: Every reduction in EMOD translates into direct cost savings.
• Improved Bidding Competitiveness: In construction, manufacturing, and other sectors, a high EMOD can disqualify you from contracts.
• Enhanced Workplace Culture: A safer work environment boosts morale, reduces turnover, and improves productivity.

How EMOD Is Calculated

Your EMOD is calculated by the National Council on Compensation Insurance (NCCI) or a state-specific rating bureau. It’s based on:

• Payroll and classification codes
• Claim frequency and severity over a three-year window (excluding the current policy year)
• Expected vs. actual losses

Frequent small claims can hurt your EMOD more than a single large one, making proactive risk management essential.

Strategies to Reduce Your EMOD

1. Build a Safety-First Culture
– Train employees consistently, enforce safety protocols, and empower them to report hazards without fear of retaliation. Visible leadership buy-in is critical.
2. Launch a Formal Return-to-Work Program
– The faster an injured employee can return to modified or transitional duty, the lower the claim cost. Document your return-to-work policies and communicate them clearly.
3. Prevent Small Claims
- Since frequent minor injuries can disproportionately inflate your EMOD, focus on ergonomic training, housekeeping, and proactive interventions to reduce “nuisance” incidents.
4. Conduct Root Cause Analysis on Every Incident
- Don’t just record injuries—analyze them. Use root cause methods (like 5 Whys or Fishbone diagrams) to identify and address systemic issues.
5. Partner with a Proactive Insurance Broker
- Choose a broker like HUB International who specializes in loss control and EMOD analysis. They should provide detailed reporting, help you understand claim trends, and offer strategic guidance.
6. Engage Employees in Risk Mitigation
– Safety committees, peer-to-peer safety coaching, and even small incentive programs can increase buy-in and lower risk.
7. Audit Classification Codes
- Ensure your employees are properly classified. Misclassification can skew your EMOD and cause you to overpay for coverage.
8. Monitor and Close Claims Promptly
- Work closely with your claims adjuster to actively manage open cases and pursue claim closure when medically appropriate.

Track Your Progress Over Time

Improving your EMOD doesn’t happen overnight—it’s a lagging indicator. But by implementing a focused, data-driven safety and claims strategy today, you’re setting the stage for future cost savings.

Final Thoughts

EMOD is more than just a number—it’s a direct reflection of your safety practices, claims history, and operational discipline. Lowering it takes intentional effort, but the payoff can be substantial.

For HR, safety, and finance professionals alike, EMOD reduction is one of the clearest pathways to lowering insurance costs and improving operational resilience.
Now’s the time to stop letting your EMOD work against you—and start making it work for you.