If you’re a South Texas contractor wondering why your workers’ compensation insurance costs keep climbing-or why you keep getting screened out of bid lists before anyone reads your price-the answer might be a single number sitting on your policy: your experience modification rate, or EMR.

Key Takeaways

EMR in construction is a numerical score that measures a company’s safety performance by comparing its workers’ compensation claims history against the industry average. An EMR of 1.0 is the industry average. Scores below 1.0 indicate better-than-average safety performance and fewer claims than average, earning a premium discount. Scores above 1.0 indicate higher risk and a longer claims history, triggering a surcharge. For South Texas contractors competing in 2026 and beyond, understanding this number is no longer optional-it’s a prerequisite for staying competitive.

• EMR is a multiplier used to determine workers’ compensation premiums. In Texas, your total workers comp premium is essentially Payroll × Class Rate × EMR, so a construction company’s EMR of 0.82 versus 1.15 can be the difference between winning and losing a JBSA-adjacent or hospital project bid.
• Texas loss costs are dropping again: TDI approved an average 3.8% decrease effective July 1, 2026, but your EMR determines whether your firm actually captures those savings or watches them evaporate.
• EMR is calculated using three years of claims data excluding the most recent year. A 2026 modifier uses 2022–2024 claims, which means safety and claims work done now in 2026 will start showing up on your company’s EMR in 2028.
• ABC South Texas STEP is a proven framework for driving safety improvements that move your EMR forward. The time to start is today, not after you lose a bid.

What Is EMR in Construction and Why It Matters Right Now (2026)

EMR stands for Experience Modification Rate in construction. It is a numerical factor applied to your Texas workers’ compensation policy that compares your construction company’s actual workers’ comp losses to expected losses for firms of similar payroll and trade operating in the same industry. An EMR of 1.0 is the industry average-a baseline that says your loss experience matches what insurance companies predicted for a firm your size.

An EMR below 1.0 signals better-than-expected safety performance, can lead to lower insurance premiums, and generates a premium credit. Companies with an EMR of 0.8 pay 20% less in premiums compared to the average. Conversely, an EMR above 1.0 produces a surcharge-a company with an EMR of 1.2 pays 20% more for insurance, and a higher EMR can result in higher insurance premiums and potential disqualification from bids.

Here’s the core premium relationship in plain language: Texas workers comp premium equals your company’s payroll times the class code rate times your EMR. Consider a South Texas framing contractor with $3 million in annual payroll classified under code 5403. At EMR 1.00, the base premium lands around $120,000. At 0.80, that drops to roughly $96,000. At 1.20, it jumps to $144,000. A lower EMR leads to lower workers’ compensation insurance costs-and that $24,000 swing between 1.00 and 0.80 can fund a full-time safety coordinator.

The “why now” is straightforward. The Texas Department of Insurance approved an average 3.8% decrease to NCCI workers’ comp loss costs effective July 1, 2026, under Commissioner’s Bulletin B-0001-26. That sounds like relief across the board-but whether an individual construction company sees real savings depends heavily on its EMR rating. If your modifier is running above 1.0, those rate decreases get swallowed by your surcharge.

In San Antonio and across the 22-county South Texas footprint, major owners-data center developers, healthcare systems, and industrial clients along the I-35 and I-10 corridors, plus JBSA-adjacent federal work-are screening bidders by EMR before they ever look at price. Many projects require EMR ratings below 1.0 to qualify for bidding.

The broader safety context intensifies this. Statewide claim counts fell from around 114,245 in 2022 to roughly 87,713 in 2024, a drop of about 23%, even as payrolls grew. Claim frequency has fallen more than 40% over the last decade. Competition for a good EMR rating isn’t getting easier-it’s getting tighter, because the average EMR reflects an industry that’s collectively getting safer.

This guide will show South Texas merit shop contractors exactly how EMR is calculated, what “good” looks like in 2026 prequalification, and the specific steps-safety culture, claims management, and ABC STEP enrollment-that can move your EMR score in the right direction.

How EMR Is Calculated for Construction Companies

The EMR calculation is formula-driven but understandable once you break it into components: payroll data, class codes, expected losses, actual losses, and credibility factors.

The experience period covers three policy years, excluding the most recent year. For a 2026 EMR effective on a January 1 policy, the calculation typically reflects past workers’ compensation claims from 2022, 2023, and 2024. The 2025 year is excluded because those insurance claims are still developing. EMR ratings are updated annually on policy renewal dates.

“Actual losses” include both paid claim amounts and open claim reserves-what the insurer expects to pay in future losses. This means reserve management matters as much as closed claims history. Over-reserving a handful of open workers comp claims can inflate your actual losses and push your modifier higher for an entire rating year.

“Expected losses” are actuarial predictions based on your audited payroll by industry classification code-for example, 5403 for carpentry, 5213 for concrete, 8810 for clerical-combined with expected loss rates set for Texas. These benchmark figures represent what an average construction firm of your size and trade mix would be predicted to generate.

The simplified EMR formula works as follows: EMR approximates the ratio of actual to expected losses after statistical adjustments. If your actual losses match your expected losses, your company’s EMR lands near 1.00. If a South Texas framing contractor has three-year expected losses of $400,000 and adjusted actual losses of $280,000, the core ratio is 0.70, which after credibility adjustments might yield an EMR around 0.76.

Very small construction firms with annual workers’ comp insurance premiums under a typical threshold-often around $5,000 to $10,000-may not be experience-rated yet and instead pay a manual rate without an EMR modifier until their payroll grows.

Inside the EMR Formula: Primary Losses, Expected Losses, and Claim Frequency

The EMR formula does not treat every dollar of loss equally. Losses are split into primary loss and excess loss portions using a split point of about $18,500 in most NCCI plans, with Texas aligning closely. The expected primary loss portion is weighted far more heavily because it reflects claim frequency-how often injuries happen.

Here’s a concrete example: a single $100,000 claim might be counted as roughly $18,500 in actual primary loss plus $81,500 in actual excess loss. But ten separate $10,000 claims could generate approximately $100,000 of primary losses, since each claim’s full amount falls below the split point. The takeaway is critical: frequent small claims are worse for your EMR than a single large but rare event with the same total cost. Multiple smaller employee injuries-strains, lacerations, slips-accumulate primary losses rapidly.

The formula matches expected primary loss and expected excess loss against actual primary loss and actual excess loss, with statistical ballast factors that prevent very small employers from swinging wildly on a single claim. Larger employers with higher expected losses have their own claim experience weighted more heavily, meaning their operations and the company’s safety culture truly drive the EMR. Smaller firms’ modifiers are more closely blended with statewide averages, making even a single claim impactful.

Texas-Specific EMR Mechanics Contractors Need to Know

While broad EMR concepts apply nationwide, Texas has unique regulatory and market features that South Texas construction companies must understand.

TDI oversees workers’ compensation coverage in Texas by adopting NCCI advisory loss costs and the Texas-specific experience rating plan manual. The state rating bureau works with NCCI infrastructure but maintains Texas-only rules. For policies effective on or after July 1, 2026, TDI has approved NCCI’s filing lowering loss costs statewide by an average of 3.8%. The National Council on Compensation Insurance, commonly called NCCI, is the organization behind the experience rating system used in Texas and most other states.

Starting July 1, 2026, Texas will display loss costs, rates, and expected loss rates to three decimal places on quotes and policies. This precision makes EMR-driven differences more visible in bids-3.482 versus 3.917 rather than rounded figures.

Key classification updates matter for construction companies. A new standard exception code, 8871, for clerical telecommuters working more than 50% remotely, launches alongside the existing 8810 for in-office staff. Correct classification can directly affect expected losses and, in turn, the emr calculated for your firm. Hazardous material remediation classifications are also being revised.

Texas is the only state where workers’ comp is optional for most private employers. Some construction firms legally choose to become nonsubscribers, but this means losing statutory protections and facing higher litigation risk-lost wages claims, medical expenses, and medical benefits disputes all become direct liability. Most serious commercial and industrial owners in San Antonio and across South Texas demand proof of workers’ compensation insurance and a current EMR rating as part of prequalification. Contractors on government projects-state, municipal, school district, and most federal work-are effectively required to carry workers’ compensation insurance.

Work with your insurance agent or broker to obtain and review your official Texas rating worksheet each year rather than relying on rough estimates.

What Is a “Good” EMR for South Texas Construction Projects?

Across the construction industry, an EMR of 1.0 is the industry average. Companies with EMRs below 1.0 pay lower workers’ compensation premiums, and many South Texas owners view 0.85 or lower as “excellent” when screening bidders for high-hazard work. Companies with lower EMRs are often viewed as lower-risk partners.

For typical commercial projects in San Antonio, New Braunfels, or the Rio Grande Valley, a contractor with an EMR under 1.00 will usually clear first-line prequalification, while EMRs above 1.10 may trigger additional scrutiny. Subcontractors with EMRs above 1.2 face bidding restrictions on many tier-1 projects and face higher insurance costs that erode margins.

Here’s how South Texas owners generally view the scale:

• 1.00 = average; clears basic gates
• 0.85 = competitive for hospital, data center, and industrial work
• 0.75 and below = elite performer; opens doors to the most selective projects

A hospital project on the South Texas Medical Center campus might require each subcontractor’s EMR to be at least 0.90. A petrochemical client near Corpus Christi may insist on 0.85 or below for any contractor performing confined-space or hot work.

Bonding companies and large general contractors often treat two consecutive years of rising EMR as a red flag even if the current score remains under 1.00. Track your company’s EMR trend line year over year, not just the most recent number.

How EMR Affects Bidding, Prequalification, and Profitability

EMR simultaneously influences top-line revenue through prequalification and bottom-line margin through workers’ comp cost. For owners, CFOs, estimators, and safety directors inside construction firms, it’s one number that touches everything.

Many public entities and institutional owners across the 22-county South Texas region use EMR as a pass/fail gate before they read your proposal. If your company’s EMR exceeds its EMR thresholds, that bid may never be scored on price or technical value. Many project owners require subcontractors to have an EMR below 1.0 to bid on projects, and general contractors often exclude subs with high EMRs from bids-particularly for JBSA-adjacent or hospital work. Subcontractors with high EMRs may be entirely excluded from bidding opportunities. EMR ratings affect a subcontractor’s ability to secure work across all project types.

Consider the margin impact: if a heavy civil firm along I-35 has a same base premium of $500,000 at EMR 1.00, a 1.25 EMR adds $125,000 in annual insurance costs. At a 4% net margin, that extra cost requires over $3 million in additional annual revenue just to break even. A 20% increase in EMR raises premiums by about $600 per employee across a mid-size crew. Companies with EMR above 1.2 face higher insurance costs that compound across every payroll cycle, leading to higher premiums that directly reduce competitiveness.

Surety underwriters view a rising EMR as an indicator of operational strain. Higher incident rates can signal issues with supervision, training, or workforce gaps, which may result in tighter aggregate bond limits or higher bond rates. Maintaining a low EMR results in fewer injuries, reducing project delays and enhancing productivity. A low EMR fosters a strong safety culture and improves project competitiveness-a true competitive advantage.

Texas Claim Trends: Why the Bar for a Competitive EMR Keeps Moving

Texas workers comp has grown steadily safer over the last decade, and that trend directly influences what counts as a competitive EMR for the construction sector.

Claim counts statewide declined from about 114,245 in 2022 to roughly 87,713 in 2024, a drop of about 23%, even as payrolls grew. Over the last ten years, claim frequency-claims per $1 million in payroll-has fallen more than 40%. These reductions drive TDI’s repeated loss cost decreases, including the 3.8% average cut effective July 1, 2026. Implementing safety programs can reduce injury costs by up to 40%, as the statewide data show.

But the flip side matters: when industry-wide expected losses fall, a contractor with “just okay” safety and average claim frequency may look worse relative to peers, nudging its EMR toward or above 1.00 even if nothing has obviously changed internally. Insurance carriers are recalibrating what “normal” looks like.

For merit shop contractors, the firms maintaining disciplined employee safety programs, fast claims reporting, and aggressive return-to-work will be rewarded with EMR scores in the 0.70s and 0.80s-positions that open doors to premium projects and save money on every policy renewal.

Experience Rating Lag: Why Improvements in 2026 Show Up on EMR in 2028

EMR is based on a historical three-year window that excludes the most recent policy year. Operational changes don’t fully appear in your modifier until roughly two years later.

For a January 1, 2028 EMR, the experience period will include policy years 2024, 2025, and 2026. Improvements made in 2026 reduce safety incidents in that year, but those results won’t influence the published EMR until 2028 and will remain in the calculation through 2030. It takes 2-3 years to see EMR improvements reflected in your modifier.

The flip side stings: a rough 2023 with multiple strains and sprains stays in a contractor’s EMR through at least the 2026 rating, even if 2024 and 2025 are spotless. Ask your insurance agent or the state rating bureau for the exact valuation date-often six months before the mod effective date-because any open claim reserves at that snapshot get locked into the EMR calculation for the full rating year.

The planning implication is clear: if you want a bid-winning EMR for a large 2028 industrial project, the serious work-STEP participation, safety training, supervision upgrades, and claims management-must begin now in 2026.

Practical Ways to Lower Your Construction Company’s EMR

This is the playbook for owners, CFOs, safety directors, and risk managers focused on reducing claim frequency, controlling severity, and ensuring the accuracy of EMR data. Improving safety practices can lower a company’s EMR over time-here’s how.

The fastest long-term lever is reducing everyday injuries through task planning, job hazard analyses, toolbox talks, and supervisor coaching. Because the EMR formula weights frequent small claims more heavily than rare large losses, preventing strains, slips, hand lacerations, and eye injuries delivers disproportionate benefit. Fewer claims in any given year directly improve the actual losses that feed your emr calculation.

Early reporting and triage matter enormously. Encourage on-the-spot incident reporting, access to occupational medicine clinics, and nurse triage lines. Promptly treated minor injuries avoid unnecessary escalations and lost-time claims, keeping both medical expenses and indemnity payments low.

A formal return-to-work program converts potential lost time claims into medical-only claims, which carry less weight in the EMR formula. Offer modified duty, material staging, equipment inspections, and digital plan updates-so injured craftworkers can contribute while recovering. Build relationships with medical providers familiar with construction tasks so treatment plans support light-duty options on jobsites from Boerne to Seguin.

Front-line supervisory training is critical. Foremen should recognize early signs of fatigue, heat stress, and ergonomic strain, especially during South Texas summers. Safety rules and procedures consistently enforced at the crew level prevent recurring injuries that generate more claims and push EMR upward.

Integrate leading indicators-near-miss reports, safety observations, pre-task planning quality-into weekly operations reviews. Safety management software can help track these metrics systematically. The culture supporting a lower EMR should be driven by field leadership, not just the safety department.

Managing Claims, Reserves, and EMR Data Before Your Rating Date

Even with strong workplace safety, poor claims management can leave unnecessary dollars in the actual loss column of your EMR worksheet.

Know your rating cycle. Identify your EMR effective date and work backward to the loss valuation date-often six months earlier-when the rating bureau snapshots all open claims and reserves. Schedule a claims review meeting 90–120 days before valuation with your carrier or TPA. Walk through each open claim, confirm its status, and verify that reserves still reflect realistic expectations given treatment progress.

Over-reserving even a handful of claims inflates actual losses. For example, trimming an overstated reserve from $75,000 down to $35,000 before valuation can materially improve your EMR for an entire rating year. Verify audited payroll by class code-misclassified hours can distort expected losses and skew the calculation.

Request and review your official EMR worksheet every year. Check claim counts, loss amounts, policy periods, and class codes for errors. Corrections are time-sensitive and should be pursued promptly through your agent or the rating bureau. Accurate claims data and payroll data are the foundation of a fair modifier.

Getting Credit for the Right Work: Classification, Payroll, and Expected Losses

Correct class codes and payroll allocation ensure your expected losses reflect the real mix of field and support work you perform. Each construction classification-5213 concrete, 5403 carpentry, 5538 sheet metal-has its own rate and expected loss profile. Misplacing payroll into a higher-risk code increases expected losses and distorts your EMR.

Standard exception classes matter. Clerical office staff under 8810 and, starting July 1, 2026, telecommuting clerical under the new 8871 code should be captured correctly. These lower-rate classifications can significantly reduce overall insurance premiums without sacrificing EMR credibility.

Contractors with fabrication shops, service divisions, or design-build operations should carefully separate payroll by operation. Conduct an annual internal audit-ideally ahead of the insurer’s audit-to verify that foremen, project managers, and estimators are classified correctly and that mixed-duty roles have payroll split according to time records. EMR directly affects workers’ compensation insurance premiums, and getting your company’s payroll classifications right is one of the simplest ways to ensure fairness.

How ABC South Texas STEP Helps Drive a Better EMR

ABC’s STEP (Safety Training Evaluation Process) is a national safety management system launched in 1989, designed to benchmark and improve member safety performance using a structured evaluation of roughly two dozen core elements.

ABC South Texas promotes STEP as the chapter’s primary safety framework, with local coaching, a STEP Subcommittee, and recognition for members progressing from Participant through Bronze, Silver, Gold, Platinum, and Diamond levels. Members complete an annual online application-about 30 minutes-covering leading indicators like training hours, pre-task planning, and near-miss reporting alongside lagging indicators like recordable rates and lost-time rates. The result is a confidential, nationally benchmarked safety scorecard.

STEP connects directly to EMR improvement. Firms that adopt STEP strengthen the management practices that reduce claim frequency-field engagement, hazard identification, effective orientations, and subcontractor oversight-eventually producing lower actual losses than expected losses. STEP scorecards and recognition can be used in owner prequalification packets and insurance discussions to demonstrate a proactive safety culture beyond what the current EMR alone may show, especially valuable while your modifier still reflects older claims history. A good EMR rating, combined with a strong STEP score, tells owners that your safety record is real and improving.

Contact ABC South Texas staff or the STEP Subcommittee for hands-on help completing the application, interpreting your score, and building a plan aimed at a bid-winning EMR.

Building a Safety Culture That Sustains a Low EMR

Sustainable EMR gains come from culture, not one-off initiatives. Safety has to be embedded in how South Texas merit shop contractors plan work, supervise crews, and reward safety performance.

Leadership commitment is the foundation. Owners, executives, and project leaders should visibly champion safety, review safety metrics alongside schedule and cost, and tie supervisor evaluations to both production and safety outcomes. Field engagement means daily or weekly toolbox talks tailored to current tasks-trenching in Seguin, crane picks in downtown San Antonio, elevated work at a Hill Country resort-and active safety observation programs where workers speak up without fear.

Workforce development connects directly to EMR. Apprenticeship programs, craft training, and competent-person designations lead to fewer errors and safety incidents. ABC South Texas offers training and apprenticeship resources that complement STEP and support a stronger modifier.

Prime contractors should require subs to meet minimum EMR standards, participate in STEP where possible, and adopt site-specific safety plans. One subcontractor’s poor performance can lead to workers’ compensation claims that affect the GC’s experience. Reinforce culture through peer recognition, success stories shared at company meetings, and leadership visits to jobsites focused on listening to workers’ safety concerns. Safety protocols consistently followed at every level are what separate elite construction firms from average performers.

Action Plan: What South Texas Contractors Should Do About EMR in the Next 12 Months

Here’s a concrete roadmap for owners, CFOs, and safety directors to position their firms for a better EMR by the 2028 bid cycle.

• Step one: Obtain your current EMR letter or rating worksheet from your insurance agent or the Texas rating bureau. Confirm your current modifier, understand which three policy years it includes, and identify which claims are driving the number. Know your experience modification inside and out.
• Step two: Schedule a claims review before the next valuation date. Address reserve adequacy, explore return-to-work options for any open lost-time cases, and ensure no clerical errors are embedded in the data that feeds your workers’ compensation claims history.
• Step three: Audit your class codes and payroll allocations. Make sure clerical and telecommuting staff (post July 1, 2026, under code 8871), shop, and field roles are properly distinguished to avoid overpaying for insurance coverage and skewing expected losses.
• Step four: Enroll in the ABC STEP Safety Management System through ABC South Texas this year. Use the resulting scorecard as a blueprint to strengthen leading indicators to reduce claim frequency over 2026 and 2027.
• Step five: Build or refine a written return-to-work program with specific light-duty task lists for field and office roles. Communicate it clearly to supervisors so it’s used consistently when injuries occur.

Because of the EMR rating lag, the contractors who act in 2026 will be the ones showing bid-winning EMRs by 2028-exactly when many large public and private capital programs in South Texas are expected to be in full swing. Know your EMR, request your rating worksheet, and enroll in STEP through ABC South Texas to start the two-year climb toward a modifier that wins work.

Ready to get started? Contact ABC South Texas today about STEP participation and safety training. Your 2028 EMR-and the bids it opens-depend on what you do right now.

FAQ: EMR Construction Questions South Texas Contractors Ask

How can I find out exactly how my construction company’s EMR was calculated?

Request your official experience rating worksheet-sometimes called a “mod worksheet”-from your insurance agent or directly from the Texas rating organization. This document breaks out payroll, expected losses, and actual losses by policy year and claim. It lists each claim that entered the calculation, showing how much of each loss is treated as primary versus excess, and includes credibility factors unique to your company size. Review it annually with both your broker and internal safety staff to verify data accuracy and identify which injury categories are disproportionately impacting your EMR.

Does EMR apply differently if my construction company works in multiple states?

Multi-state contractors may receive an “interstate” EMR that combines experience from all NCCI states, while some large independent states issue their own state-specific modifiers. Texas uses its own plan but relies on NCCI infrastructure and data from the National Council on Compensation. If a South Texas contractor opens operations in another state, payroll and claims from that state may flow into either a combined interstate mod or parallel state-specific mods. Discuss interstate rating implications with your broker before bidding on out-of-state work, especially if owners there have stricter EMR thresholds than those of typical Texas clients.

What happens to my EMR if my construction company has one very large claim?

The EMR formula is designed so that a single large loss does not devastate the modifier as severely as multiple smaller losses would. This is due to the primary and excess loss split: a $300,000 catastrophic claim might have only the first approximately $18,500 treated as primary loss, with the remainder discounted as excess. By contrast, a dozen $15,000 injuries could generate roughly $180,000 in primary losses. However, a very large claim will still raise the EMR for the three years it remains in the experience period, so focused prevention and timely return-to-work efforts remain critical.

Can improving my OSHA recordable rate quickly lower my EMR?

Lower OSHA recordable and DART rates usually correlate with a healthier EMR over time, but EMR and OSHA statistics are calculated differently and on different schedules. Strong OSHA performance in 2026 is important evidence of a better safety culture, but because of the three-year experience period and rating lag, those improvements will begin influencing your company’s EMR primarily starting in 2028. Track and improve both metrics, using programs like ABC STEP to align leading indicators with lagging outcomes rather than treating the EMR as the only measure that matters.

How do I get started with ABC South Texas STEP to help my EMR long term?

Contact ABC South Texas directly by phone or through the chapter website to request STEP enrollment information. The application is free for members and can be completed online in about 30 minutes. Designate a cross-functional team-including safety, operations, and leadership-to complete the STEP application honestly, review the resulting scorecard, and set 12- to 24-month goals tied to EMR improvement. Reach out to the ABC South Texas STEP Subcommittee for one-on-one coaching on how to use the framework to reduce claim frequency, strengthen your company’s safety culture, and position your firm for a stronger EMR during the next rating cycles.