ACSR 9 – Workers Compensation And Employers Liability Insurance Practice Test

Which statement about EMF is true?

A higher EMF reduces premium. EMF is calculated solely on payroll. Lower EMF reduces premium, higher EMF increases premium. EMF is not used in workers' compensation.

Correct Answer:

Lower EMF reduces premium, higher EMF increases premium.

Explanation:

Experience Modification Factor (EMF) measures how your past workers’ compensation losses compare with what’s expected for your business class and payroll. It’s used in setting your premium, typically in a formula like manual rate × payroll × EMF. When losses are better than expected, the EMF falls below 1, which lowers the premium. When losses are worse than expected, the EMF climbs above 1, raising the premium. This means EMF has a direct impact: lower EMF reduces cost, higher EMF increases cost. EMF isn’t based only on payroll; it incorporates actual claims history relative to expectations for your class. And yes, EMF is a standard part of workers’ compensation rating and underwriting, not something outside its use.

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