What is EMR in Construction? (And How Construction Safety Affects Your Bottom line)
Have you ever had to ask yourself, what is EMR in construction?
EMR is a little construction safety metric hiding in your company’s profile that has a bigger impact on your bottom line than you realize.
Here’s what you need to know.
What is EMR in Construction?
EMR stands for Experience Modifier Rate - a number used to gauge a construction company's safety metrics
EMR stands for Experience Modifier Rate. It’s a number used by insurance companies to determine the likelihood that a business will experience worker’s comp claims. A high EMR will drive premiums up, while a low score helps keep your insurance rates low.
But that’s not the only impact EMR has on your profits. It’s the only consistently quantified measure of safety on the job site, and because both government and private property owners take it into account on bids, it can have a profound impact on every level of your contracting business.
How Does EMR Work?
To calculate your EMR, insurance companies start with data reported to the National Council on Compensation Insurance, and compare your data against the industry average.
An EMR of 1.0 indicates that your claims history over the past five years is average for a business in your industry of your size. A score higher than 1.0 indicates that you have a more costly claims history than average, and a score under 1.0 indicates that your history shows a lower risk of costly claims.
Claims history data takes into account the number of incidents, the type of incident (for instance, medical or time lost), and the amount paid out for each incident.
Why EMR is the Only “Par” the Industry Has
The construction industry lacks a comprehensive set of standard benchmarks for comparing quality and performance among companies. When it comes to bidding on projects, property owners have to rely on a variety of subjective measures to evaluate potential contractors.
When it comes to measuring quality, timeliness, general practices of a contractor's work, there is no real 'par', or set measurable standard, in the industry (though construction software is changing that).
But for safety, that measurable standard already exists. That’s EMR. And because EMR is the only quantitative benchmark that is consistent across the industry, its impacts are amplified in ways you probably don’t realize.
5 Ways Construction Safety Impacts Your Bottom Line
A bad EMR has a direct impact on your company's bottom line
Because EMR is calculated by and for the insurance industry, it has a direct and measurable impact on the insurance premiums you pay. But that’s not the only way EMR impacts your bottom line.
Here are 5 ways a bad one is slowly killing you:
1. You’re Losing Lucrative Government Contracts
All government contracts require a maximum EMR before you can even bid. Even if you meet the minimum EMR, preferential treatment may be given to a competitor with a lower score.
2. You’re Losing Lucrative Private Contracts
Following the government model, more and more private contracts are also requiring a maximum EMR. Private contracts are even more likely than government contracts to give preferential treatment to those with lower EMRs.
3. You’re Losing Contracts to Bid Protests
Even if you meet the maximum EMR and you’re selected as the preferred contractor on a government project, you can still lose the contract if someone lodges a bid protest. A contractor with a better safety record may protest that your bid was given unfair preference in light of your high EMR… and if they succeed, they may take your contract away from you.
4. Your Competitors are Getting Preferential Treatment
You may be losing contracts on which yours was the lowest bid because of your EMR. Worse, your competitors may be quoting higher prices but still winning because of their excellent EMR.
5. You’re Spending Too Much on Preventable Safety Incidents
Your EMR isn’t just a number in an insurance file. It represents actual people incurring injuries on your job sites. If your number is higher than the average, that means you’re failing to protect your workers adequately.
Besides the enormous human cost of job site injuries, this costs you time and money that your competitors with better scores aren’t spending.
How to Improve Your EMR
Improve your company's EMR by improving your safety standards with new construction technology
To improve your EMR, improve your safety practices.
Construction is an inherently dangerous business, but there is a lot that employers can do to increase worker safety, especially with today’s technology.
The most important thing GCs can do to improve their EMR is to develop connected workflows within construction safety apps that ensure everyone on the team remains informed and up to date on safety issues as well as the locations and timing of major safety-related issues such as large equipment in use and fall hazards.
Another way technology can help improve EMR is by reinforcing safety practices among the crew. It’s easy to make policies about safety, but much harder to enforce those policies. New construction safety technology like Smartvid.io and Triax wearables are changing the game, and making it easy to identify and correct safety issues before they become incidents.