Colorado Property & Casualty Practice Exam

When the insured's Experience Modification Rate (EMR) is greater than 1.0, it indicates that the business has a higher rate of workplace injuries or claims compared to similar businesses in the same industry. The EMR is used as a tool in workers' compensation insurance to adjust premiums based on an employer's claim history.

A value greater than 1.0 reflects worse-than-average performance in terms of worker safety and claims, leading to an increased assessment for premiums. Essentially, this higher EMR suggests that the business is considered a greater risk, and as such, the insurer will charge a higher premium to offset that risk. This adjustment helps ensure that the insurance coverage appropriately reflects the potential claims costs associated with the specific business's past experiences.

In summary, when the EMR exceeds 1.0, it results in a higher premium being assessed to account for the additional risk that the business represents to the insurer.