How Important is Your EMR in the Pre-Qualification Process?

Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

With 2024 right around the corner, general engineering and trade contractors will be required by government agencies and general contractors to enter the annual pre-qualification process in order to bid work. These entities are looking closely at a company’s project history, including project size, bonding capacity, limits of insurance as well as a companies’ Experience Modification Rate (EMR).

An EMR is a numeric representation of a company’s audited payrolls for the three prior years (not including the current year) and your workers’ compensation claims history, compared to businesses in the same industry or standard classification. EMR’s create a baseline for business while allowing for a surcharge or debit when employers claims are worse than expected and a credit when employer’s claims are better than industry average. Companies with and EMR rate below a 1.00 are considered better than average, while greater than 1.00 are consider below average.

Pre-Qualification Process

In the highly competitive environment of construction bidding, it has become common that government agencies and general contractors will preclude contractors from the pre-qualification process if your EMR exceeds 1.00 or 1.25. In my opinion, this represent an oversight as many companies have strong will developed safety programs, yet their EMR is holding them back. Some examples of this include:

1. The EMR is a lagging factor. Only the last three policy periods, not including the current policy period are taken into consideration for the calculation.

2. EMR’s can include claims that may have been unavoidable and don’t represent a lack of safety (i.e. an employee was involved in an auto accident and was not at fault).

3. Large indemnity claims can have a significantly higher impact for a smaller company vs. a larger company with a similar size claim.

Rather than placing such critical importance on the contractors current EMR, government agencies and general contractors designing the pre-qualification process should include frequency indicators like incident and DART Rate (i.e. days away, restricted or transferred) or put more emphasis on a contractors’ 5 or 10-year average EMR. 

Given the importance of the pre-qualification process an and the potential for contractors to be precluded from new opportunities to bid work, we’ve developed a proprietary Key Performance Indicator “KPI” Dashboard as well as our SafetyOne Desktop & Mobile App to assist companies in managing their EMR. These tools will, among many things, help you:

• Benchmark your experience against your peers.

• Weigh the impact of any claim to your EMR.

• Project your future EMR a year in advance.

If you would like a KPI created for your company, or would like to learn more about our SafetyOne App, please email me at sclayton@ranchomesa.com.

Understanding the DART and TCIR Calculations

Author, Lauren Stumpf, Media Communications and Client Services Specialist, Rancho Mesa Insurance Services, Inc.

When a project owner asks you to provide the company’s DART or TCIR rate, it may seem a little overwhelming at first. But, the two numbers are really a score that can be used to compare contractors’ safety history. These numbers can be important during the bidding process when comparing multiple bids and could be a determining factor for who is awarded the contract.

DART stands for days away, restricted, or transferred. A DART rate is used to track any OSHA recordable workplace injury or illness that result in days away from work, restricted duty, or transfer of duties.

On the other hand, the TCIR is the total case incident rate (also known as the Total Recordable Incident Rate or sometimes referred to as the OSHA Incident Rate). It measures a company's past safety performance based on their incident rate. A TCIR is found by looking at the number of work-related injuries per 100 full-time workers during a one-year period.

The TCIR will likely be higher than the DART because it includes all incidents, not just the ones that results in lost time.

Project owners are increasingly requesting these numbers along with the project bid. Not only do they want to see how much it’s going to cost them to build the project, but they want to know how safe their contractor is on the jobsite. These numbers show that.

OSHA also uses these calculations to monitor high-risk industries.

Rancho Mesa’s Risk Management Center features a tool that helps contractors generate their DARTs and TCIRs. Contractors can use the Incident Track application to enter and track an incident’s details. Once that incident has been saved, the system will allow them to generate OSHA logs based on that data and generate the DART and TCIR.

“It’s an easy-to-use tool that ensures the numbers are accurate and available whenever they’re needed,” said Alyssa Burley, Media Communications and Client Services Manager with Rancho Mesa Insurance Services, Inc.

To learn more about the Risk Management Center’s capabilities, sign up for an upcoming webinar at www.ranchomesa.com/workshops-and-webinars.