Rancho Mesa's Lauren Stumpf and Vice President of the Construction Group Sam Clayton discuss the importance of a contractor’s EMR rate during the pre-qualification process of construction bidding.
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Director/Host: Lauren Stumpf
Guest: Sam Clayton
Producer/Editor: Megan Lockhart
Music: "Home" by JHS Pedals, “News Room News” by Spence
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Transcript
Alyssa Burley: This episode is brought to you by Zenith Insurance Company. Zenith is the premier worker’s compensation specialist and industry leader. When you insure with Zenith, you're making a long term investment for employees and the success of your business. Experience the Zenith difference. Invest in the best.
AB: Hi, this is Alyssa Burley with Rancho Mesa's Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News. Brought to you by our Safety and Risk Management Network, StudioOne.
Lauren Stumpf: Welcome back, everyone. This is Lauren Stumpf, Marketing and Media Communication Specialist with Rancho Mesa. My guest today is Sam Clayton, Vice President of the Construction group with Rancho Mesa. He specializes in commercial insurance for concrete, utilities, street and road contractors. Today, we're going to talk about the importance of a contractor's EMR rate during the pre-qualification process of construction bidding. Sam, welcome to the show.
Sam Clayton: Good morning, Lauren. Glad to be here.
LS: So with 2024 right around the corner, general engineering and trade contractors will be required by government agencies and general 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 to insurance, as well as a company's experience modification rate or EMR. Sam, for listeners who may not be familiar, can you please explain what the EMR is?
SC: Absolutely. An EMR is a numeric representation of a company's audit payrolls by class code for the three prior years, not including the current year and your worker’s compensation claims history compared to businesses in the same industry or standard classification. EMRs create a baseline for businesses while allowing for a surcharge or debit when an employer's claims are worse than expected and a credit when an employer's claims are better than industry average. Companies with an EMR rate below 100 are considered better than average, while greater than 100 are considered below average.
LS: Can you please explain the pre-qualification process?
SC: Well, 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 one or 1.25. In my opinion, this represents an oversight, as many companies have strong, well-developed safety programs, yet their EMR is holding them back.
LS: Do you have any examples you could give us of this?
SC: Sure. Some examples include the EMR is is really a lagging factor. Only the last three policy periods, not including the current policy period, are taken into consideration for the calculation. Another example would be an EMR can include claims that may have been unavoidable and don't represent a lack of safety. For example, an employee was involved in an auto accident and was not at fault. And large indemnity claims have a significantly higher impact for smaller companies versus a larger company with a similar sized claim. Rather than placing such critical importance on the contractors EMR, in my opinion, government agencies and general contractors designed the pre-qualification and process should include frequency indicators like Incident and DART rate, which is Days Away, Restricted or Transferred, or put more emphasis on a contractor's five or ten year EMR average. So given the importance of the pre-qualification process 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 and mobile app to assist companies in managing their EMR. These tools will, among many things, help your company benchmark your experience against your peers, weigh the impact of any claim to your EMR and project your future EMR, a year in advance.
LS: And we will include a link to learn more about our SafetyOne™ app in the episode notes. Sam, if listeners have questions about creating a KPI, what's the best way to get in touch with you?
SC: I can be reached at 619-937-0167 or s clayton, C-L-A-Y-T-O-N, at ranchomesa.com.
LS: All right, Sam, thank you for joining me in StudioOne.
SC: Thanks a lot.
AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode. Produced by StudioOne. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.
