The Total Recordable Injury Rate (TRIR) and the Experience Modification Rate (EMR) are both critical employer safety metrics.
Both the TRIR and the EMR are enshrined safety metrics within the Construction Industry (and others) as indicators of an employers safety performance. If you're wondering why this is important, the Experience Modification Rate, the Total Recordable Injury Rate (or Total Recordable Incident Rate) or both of these factors can be used in the hiring process of the numerous contractors working on a construction project.
Note: If you are unfamiliar with Experience Modification Rating, our Experience Modification Rate FAQ page will be a good resource for you.
So, for example, if your Experience Modification Rate is over the average rate (a 1.00 is average), you will likely get passed over for a lot of work. Similar with the TRIR whose scores are compared to an industry average. If your rate is 6.2 but your industry average is a 4.1, that could spell a lot of trouble.
Similarities Between The Experience Modification Rate and the Total Recordable Injury Rate.
The similarities are few compared to the differences. So, let's start with similarities. First, they both, as stated, attempt to describe what type of safety culture you have by measuring your injury performance.
Second, the TRIR and the EMR are both lagging indicators. They take past performance
to arrive at a current rate. Of course, future performance could be better, worse or the same depending on a variety of factors.
As mentioned above, a third similarity is both are utilized to measure the quality or results of your safety program, and to measure one company's performance against another's. This practice of qualifying new business proposals or contract renewals partially based on a company's EMR or TRIR is hotly debated. There is no shortage of strong opinions on the subject. I even posted on the use of Experience Modification Rates for this purpose twice. So, if you're interested in learning more about this industry practice, you can read:
Lastly, they are both very easy to improve (in theory). If you reduce your workplace injuries, you'll reduce both your Experience Modifier and your Total Recordable Injury Rate.
Differences Between The Experience Modification Rate and the Total Recordable Injury Rate.
Complexity Of The TRIR and EMR Calculations
The differences between the EMR and the TRIR are what I find most interesting because these are two very different routes trying to arrive at the same destination. Just for starters consider the varying level of complexity to arrive at both of these metrics. The TRIR is wonderfully simple:
# Incidents X 200,000
Total Man Hours Worked
200,000 represents the total number of hours 100 employees work in 50 weeks (as established by OSHA) based on a 40 hour work week.
Do not include vacation or leave hours. Do include temp workers from an agency if their daily activities are under your direction.
Experience Modification Rate Calculation
On the other hand you have the Experience Modification Rate which is an actuarially determined rate with too many factors to discuss here (even if I could!). As a result, it's not immediately obvious what is a good experience modification rate.
Here is the first page from an Experience Modification Worksheet. You can see many of the factors used to calculate an EMR (but not all!). And, the complexity is compounded by the fact that this company operates in multiple states; many of whom have special rules that must be factored into EMRs.
Regarding complexity, there's no reason to audit your TRIR calculation. As stated above, it's "wonderfully simple." However, the EMR is a different story. The more complexity you add to anything the greater the chances are that errors occur. And this is especially true of the Experience Modification Rate. In fact, engaging an expert to audit EMR calculations has become a routine risk management practice for many businesses.
Sensitivity To Change
A second difference between the two metrics is how sensitive they are to change. The TRIR is measured annually. So, every year you get a "reset." If last year's score was bad, you can bear down, improve your safety practices & procedures, reduce injuries and improve (reduce) your Total Recordable Injury Rate.
The Experience Modification Rate, in contrast, doesn't change swiftly. The EMR is an average of your workers' compensation insurance claims (injuries) experience over 3 years compared to others in your industry. And, it is an average that begins 4 years ago (or 4 insurance policy periods ago). So, last year's "experience" isn't included. Rather, the 3 years beforehand.
This can be either good or bad for your EMR. If you have an Experience Modification Rate that you wish to improve, one good year isn't going to help you right away. It'll take 2 years, or policy periods, for that good "experience" to enter into your 3-year average. And, even then, it will only account for 1/3 of your average. Making improvements to your Experience Modification Rate requires a long-term commitment to improvement of your safety culture.
On the other hand, if you have a good EMR, one bad year won't sabotage your Experience Modification Rate. And, even companies with great safety cultures will have a bad year once every 5 or so years. Accident's happen. If one worse-than-average-year rolls into your 3-year average, your EMR won't suffer too much. We have a description of Experience Modification Rate Calculations on our website if your interested.
The Total Recordable Injury Rate can have financial consequences for your firm if you fail to win business as a result of a poor TRIR. But, there is no direct financial impact as a result.
The Experience Modification Rate, however, has a direct impact on your bottom line; good or bad. Insurance companies use the Experience Modification Rate to modify workers' compensation premiums (the amount they charge you for work comp insurance). The EMR is multiplied by your "standard premium" and you are assessed an additional premium (debit) or awarded reduced premium (credit). If you wish to learn more review What Is An Experience Modification Rate.
TRIR & OSHA
While the Experience Modification Rate can have financial consequences described above, a poor TRIR can trigger targeted OSHA inspections. These inspections can be exhaustive reviews covering written safety guidelines, training, proper record keeping; every all aspects of your health and safety programs.
These reviews, for poor performers, can result to substantial penalties and fines.
The OSHA TRIR relies on self reporting. Businesses are responsible for completing logs and reporting their injuries. Many say that reporting is a problem in the system with larger companies (having more sophisticated safety cultures) being more compliant than smaller firms.
On the other hand, the Experience Modification Rate data is supplied by the insurance industry. Every time a businesses files a work comp claim with their insurance carrier a record is created of the workplace injury. Insurance companies send this data, among other things, to the "Rating Bureau" responsible for producing EMRs. We have not seen compliance discussed as a significant issue with respect to Experience Modification Rates.
Frequency and Severity
Another big difference between the TRIR and the Experience Modification Rate is how they treat frequency and severity. The TRIR doesn't distinguish between or weight incidents of varying severity. An injury involving a few stitches on the hand is one TRIR incident just as a severe permanent disability. The TRIR is a measurement of frequency.
The Experience Modification Rate is a measurement of both frequency and severity. How each is weighted in the Experience Rating Algorithm is discussed in this post. But, you can be sure that the larger the dollar value of a workers' comp claim, the greater it's negative impact on your Experience Modification Rate. Likewise, frequency is also a weighted measurement. If you have 20 claims averaging $2000 per claim, it won't negatively impact your EMR 10 times more than 2 $2000 claims would have. 20 will negatively impact your EMR more than 10 times the effect of 20 claims. This is due to the belief that the odds of a severe claim (injury) increase as the frequency of claims increases.
Drawing Comparisons Between TRIR & EMR (Similarities and Differences)
Drawing comparisons between your company's metrics and others is beneficial to help measure your safety program's success, set goals, etc. And, you can do this with both the TRIR and the EMR.
For example, the Bureau of Labor Statistics publishes the TRIR national average and industry-specific averages. So, after calculating your TRIR you may come up with a 2.75 and find that you're doing better than average across all industries (2.90 National Average). However, you're a construction company and you drill down to find that the national average in construction is a 2.5.
So, now it looks like you have some work to do. Especially, since, by definition, more than half of the construction firms have a better Total Recordable Incident Rate than your firm. Will that hurt your chances competing for new work?
The Experience Modification Rate is loaded with more information than the TRIR. For example, we know that a 1.00 is average. Above a 1.00 worse than average. An EMR below a 1.00 is better than average (I have posts about good Experience Modification Ratings and bad Experience Modification Rates if you want to learn more). If you're EMR is a .88, then you know you're doing a nice job with your safety management. On the other hand if your Experience Modification Rate is a 1.12, then you know you have some work to do.
And, your Experience Modification Rate is a comparison of your incident record compared to your industry; not all businesses. This is great because you know how you stack up compared to similar companies. Even more informative is that your EMR is a comparison of your safety history against those in your industry and those who operate in the same states as you. So, if you operate in Georgia, Florida, and Mississippi, your Experience Modification Rate won't factor in how you compare to similar firms in, say, Oregon, Colorado and Arizona.
TRIR vs EMR: Conclusion
The TRIR and the Experience Modification Rate are both used to measure safety performance, but they are very different metrics in terms of how they are calculated and the data used to determine their measurements. The EMR is a good, long-term overview of safety performance. And the TRIR, we think, gives a nice recent snapshot (the current and prior year) of an organization's safety record. We have seen Risk Managers collect multiple years worth both rates for review before making hiring decisions about 3rd-party contractors. Please contact us if you have any questions about how your Experience Modification Rate is calculated. The data provided for this metric is substantial and mistakes do occur far more frequent than you can imagine.
More On TRIR, EMR & Construction
These metrics almost always come up within the context of the construction industry. This is because the Construction industry is arguably the most dangerous industry for employees. Below is a table published by the National Safety Council. It shows that the Construction Industry has had the highest death of any industry rate since 2012.
Construction also ranks at or near to top of the list if you rank:
By number of deaths
By nonfatal injury and illness rates
By nonfatal injury and illness
The American Road & Transportation Builders Association (ARTBA), among other associations, awards a National Contractor Safety Award every year.
The award was created to recognize "companies that consistently maintain excellent safety records and publicize their best practices to promote worker safety throughout the industry."
What is interesting about ARTBA award is that finalists are selected based on 2 criteria; the TRIR and the EMR. Most safety award programs are judged solely on the contractor’s TRIR calculation, however, the ARTBA program also considers the applicant’s insurance Experience Modification Rate (EMR). "The top two companies in each category with the lowest recordable rate and EMR advance to the final judging stage." So, just to be selected as a finalist is a great achievement because, as stated above, your Experience Modification Rate is slow to change since it is a 3-year measurement of claims performance. You have to achieve outstanding safety results over a long term to qualify for this award rather than one good year required for the TRIR calculation.
One more thing to keep in mind about the TRIR and EMR for construction. The TRIR and the EMR are important for employees and prospective employees; not only for General Contractors to vet subcontractors. They are important for employees and prospective employees to evaluate safety culture and commitment to safety. Or, in other words, do you want to work for a company with a poor TRIR and/or EMR?
What Is A Good TRIR?
Of course, a perfect TRIR rate would be 0. That would be achieved if you had zero recordable incidents during the year. You commonly hear that a TRIR of 3.0 or less is good. This is because the Bureau of Labor Statistics, which publishes TRIR data, annually finds that the average TRIR across all employers is at or near a 3.0. For example, it was a 3.1 in 2018 and 2.9 in 2020.
But, what about Construction? In 2020 the average TRIR across all of the construction trades was 2.5. Then, the average TRIR varies considerably from one specialty trade to another. Here are some examples of average TRIR rates from 2020:
Structural steel and precast concrete contractors, 3.1
Framing contractors, 6.8
Siding contractors, 1.8
Drywall and insulation contractors, 3.6
Painting and wall covering contractors, 1.8
So, the answer to what is a good TRIR for a construction company depends on the specialty. But, a 2.5 seems like a good, acceptable benchmark for the purposes of new business proposals and contract renewals.
Stuart Cytron, MBA has been published in trade journals such Construction Forum St. Louis and St. Louis Business Journal among others. You can read more about Stuart and how he developed a passion for helping businesses reduce work comp expenses on his website.