Experience Modification Rate (EMR)

Your Experience Modification Rate is one of the most consequential numbers in your business. It directly affects what you pay for workers' compensation insurance, and it is the first thing many general contractors check before awarding a subcontract. An EMR below 1.0 earns you a premium discount and signals that your crews are safer than average. An EMR above 1.0 means you are paying a surcharge and may be disqualified from bidding on certain jobs.

For tree service companies, maintaining a low EMR is especially challenging because the work is inherently hazardous. Climbing, rigging, chain saw use, chipper operations, and working near energized power lines all drive claim frequency. A single serious fall from height can spike your EMR for three years — the standard lookback period used in the calculation.

The EMR is calculated by your state's rating bureau (NCCI in most states, or a state-specific bureau in monopolistic states). The formula compares your actual losses to your expected losses based on your payroll and class code. Actual losses are split into "primary" (the first $5,000-$18,500 of each claim, depending on state) and "excess" components. Primary losses weigh more heavily, which means frequency of small claims hurts your EMR more than a single large claim.

To improve your EMR: implement a written safety program, hold weekly tailgate meetings, invest in proper PPE and rigging equipment, and return injured workers to light-duty roles quickly. Every claim you prevent today reduces your premium for the next three years.