4d • 🔎 Case Studies
The $47,000 Difference: How Two Nearly Identical Companies Pay Wildly Different Workers' Comp Premiums
Let me tell you about two businesses I worked with in 2024. Both in HVAC installation. Both with about 17 to 20 employees and $3 million in annual revenue.
Company A paid $68,000 in workers' comp premium.
Company B paid $115,000 in workers' comp premium.
Same industry. Same size. Same city. $47,000 difference.
The reason? Experience Modification Rate (EMR).
Company A: EMR 0.82 (Below Average Risk)
This company had an EMR of 0.82—meaning they paid 18% less than the industry baseline for workers' comp. Their base premium was $83,000, but their mod brought it down to $68,000.
Here's what they did right:
1. They managed claims frequency, not just severity.
Over the past three years, they had two claims:
- One $18,000 shoulder injury (employee slipped on a roof)
- One $3,500 minor laceration (resolved quickly)
Total claims: 2 - Total paid: $21,500
2. They invested in safety upfront.
- Monthly toolbox talks on fall protection and ladder safety
- Required PPE (hard hats, harnesses, gloves) on every job
- Pre-job safety huddles before any elevated work
- Incident reporting system (near-misses logged and reviewed)
3. They had a return-to-work program.
When the shoulder injury happened, they immediately got the employee into modified duty. He couldn't climb ladders for 6 weeks, so they put him on equipment inventory, job site prep, and dispatch support. He never fully stopped working, which kept the claim cost down and sped up recovery.
Result: EMR dropped from 0.95 to 0.82 over two years. Annual savings: $10,800/year.
Company B: EMR 1.25 (Above Average Risk)
This company had an EMR of 1.25—meaning they paid 25% more than the industry baseline. Their base premium was $92,000, but their mod pushed it to $115,000.
Here's what went wrong:
1. They treated small claims like they didn't matter.
Over the past three years, they had seven claims:
- Three minor back strains ($4K, $6K, $5K)
- Two hand injuries from power tools ($7K, $8K)
- One knee injury from kneeling on concrete ($9K)
- One slip-and-fall in a client's driveway ($12K)
Total claims: 7 - Total paid: $51,000
Even though their total claim dollars were only about $30K more than Company A, their claim frequency (7 vs 2) destroyed their mod. The workers' comp rating bureau sees frequency as a predictor of future risk—and it punished them for it.
2. They had no formal safety program.
- No pre-job safety meetings
- Inconsistent PPE enforcement
- No incident tracking (they didn't even know how many near-misses they had)
- Employees weren't trained on proper lifting techniques or tool handling
3. They didn't dispute questionable claims.
One of their claims—a slip-and-fall in a client's driveway—should have been investigated further. The employee reported the injury two days after the job, and there was no witness. But the company just accepted it and moved on.
That claim alone cost them $12,000 and added to their frequency count.
Result: EMR climbed from 1.10 to 1.25 over two years. Additional annual cost: $13,800/year.
Both companies thought they were "doing fine" with workers' comp. But one was strategically managing their mod, and the other was paying a $47,000 annual penalty for not paying attention.
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The $47,000 Difference: How Two Nearly Identical Companies Pay Wildly Different Workers' Comp Premiums
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