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Winter 2000 Volume 7

Feature Articles

Workers’ compensation (work comp) insurance is a major expense for most employers. Just like most other expenses, to minimize it, it must be understood and managed. The first step to managing this expense is understanding what affects it. The Experience Modification Factor (EMF) is the largest variable for most employers’ work comp premium, and it is controllable.

In almost all states, the EMF is calculated by the National Council on Compensation Insurance (NCCI). NCCI gathers data from insurance companies to calculate the EMF for each individual organization. Although the formulas and calculations are somewhat complicated and vary state by state, the overall concept is quite similar.

The three main pieces of information that NCCI uses in calculating the EMF are three years of work comp losses four years back; premium rates for each work comp class code; and payroll for each work comp class code. This information is used to calculate actual losses and expected losses. The EMF is calculated by dividing actual losses by expected losses. A company with an EMF of 1.0 is average.

An organization with an EMF below 1.0 is better than average, and pays a lower premium than average. And an organization with an EMF above 1.0 is worse than average, and pays a higher premium than average.

Once you understand how the EMF is calculated and have compared yours to 1.0, the average for your industry, you should set goals on reducing your EMF. Depending on your size and industry, your minimum EMF could be 0.50, and in some cases even lower.

The most effective way to reduce EMF and workers’ compensation expenses is to prevent accidents from occurring in the first place. Some of the most effective methods of preventing accidents are:

  • Believe that all accidents are preventable and that it is management’s responsibility to prevent them.
  • Integrate safety into all aspects of your operations and decision-making processes.
  • Develop a method of measuring progress, such as comparing your incident rates from year to year or to the industry rates published by the Bureau of Labor Statistics. Another method would be to compare your claim dollars per $1000 payroll from year to year.
  • Analyze previous claims and OSHA 200 logs to identify trends and focus your safety efforts.
  • Investigate all accidents, injuries, and near misses; then develop and implement prevention techniques.
  • Perform regular and frequent safety audits or inspections. Do not place blame, but rather, focus on solutions.
  • Train employees to work safely and supervisors how to manage safety.
  • Get employees involved and open lines of communication. They know their jobs best and, with a little training, can identify hazards, notify appropriate personnel, or fix or avoid the hazards themselves. This will often boost employee morale by giving the feeling of ownership and make them realize that management wants the workplace to be safe.
  • Reduce employee exposures to hazards in this order: first, design out hazards; second, protect against hazards; third, train employees to avoid hazards.

Commercial printer EMF chart

The graph above shows how EMC policyholders have reduced their EMFs by applying recommended loss control techniques.

Keep in mind that three years of losses, four years back controls your EMF. It may take a while for the actions listed above to have a significant impact on your EMF, but it will be a lasting one.

Many of today’s cars are equipped with ABS, or anti-lock braking systems, but not many drivers know how to use them properly. With winter approaching, it is more important than ever to learn more about the proper use of ABS. (If a car has ABS, the ABS logo will appear on the dashboard every time you start the car.)

In the event of a skid, anti-lock brakes rely on a computer in the car to pump the brakes more rapidly than a driver could pump them. To make the system work, apply firm, steady pressure to the brake. When the ABS kicks in, drivers will feel a vibration or pulsating sensation on the brake pedal. Many drivers mistakenly believe this sensation signals a fault in the system. On the contrary, it means ABS is working properly.

While the ABS is pumping the brakes very rapidly, the wheels will continue turning. This gives drivers control over the vehicle’s steering. Since many drivers aren’t accustomed to being able to steer while skidding, they over steer and risk running off the road.

No community is safe from disaster, and the cost of these disasters is staggering — in human as well as financial terms. More than 100 communities and 900 businesses across the country are on the offensive by getting involved in Project Impact. EMC is one of those companies.

Project Impact is a voluntary initiative that calls communities together to form public-private partnerships before disaster strikes, thereby limiting and even reducing damage and loss. Long term solutions can take place at many levels — home, work, schools and in the community. Solutions may include: strengthening buildings to withstand high winds and floods; strengthening and protecting essential roads, facilities and utilities; enforcing or strengthening building codes; and securing roofs.

With its expertise in loss control, EMC is working closely with the City of Des Moines, Iowa, to build a disaster-resistant community for the future.

Road rage has been defined as a societal condition where motorists lose their temper in reaction to a traffic disturbance.  Whatever the definition, when you are behind the wheel of your vehicle or a vehicle owned by your employer, you must be aware of this condition and know how to avoid conflict. All too often road rage incidents are escalating to criminal acts that have resulted in property damage, bodily injury, or even homicide. The following tips are offered to help drivers avoid being the target of road rage:

  • Do not make obscene gestures.
  • Don’t block passing lanes.
  • Don’t switch lanes without signaling.
  • Avoid blocking the right-hand turn lane.
  • Don’t take more than one parking space.
  • If you aren’t disabled, don’t park in the disabled space.
  • Don’t allow your door to hit the car parked next to you.
  • Don’t tailgate.
  • If you travel slowly, pull over and allow traffic to pass.
  • Avoid unnecessary use of high beam headlights.
  • Don’t stop in the road to talk with a pedestrian or other driver.
  • Assume other driver's mistakes are not personal.
  • Be polite and courteous, even if the other driver isn’t.
  • Avoid all conflict if possible. If another driver challenges you, take a deep breath and get out of the way.

In addition to avoiding road rage incidents of aggressive drivers, it is each driver’s responsibility to drive with care and courtesy, and not be the aggressor. Following is The Drivers Creed, words that each driver should read and remember before getting behind the wheel.

Drivers Creed

I am the one who makes allowances for the lack of skill and the lack of knowledge on the part of the other driver. I recognize that I have no control over the unpredictable actions of other drivers or pedestrians, nor over conditions of roads or weather, and therefore I develop a defense against all these hazards. I concede my right of way and make other concessions in order to avoid collision. I am careful to commit no driving error myself, and am constantly alert to avoid the accident traps and hazards created by weather, roads, pedestrians, and other drivers.