The formula to calculate the Experience Modification Rate (EMR) is:
\[ \text{EMR} = \frac{\text{PC}}{100} \times \text{CR} \]
Where:
The Experience Modification Rate (EMR) is a metric used in the insurance industry to adjust premiums based on the risk of past losses compared to the average risk. It considers the payroll classification and the class rate to calculate a multiplier that reflects the risk level of a business.
Let's consider an example:
Using the formula to calculate the EMR:
\[ \text{EMR} = \frac{50000}{100} \times 1.2 = 500 \times 1.2 = 600 \]
This demonstrates that with a payroll classification of 50,000 and a class rate of 1.2, the Experience Modification Rate would be 600.