How to Unlock the Strategic Value of Benchmarking in Workers Compensation
Benchmarking employee injury data goes beyond addressing workers compensation concerns. It can serve as a strategic tool to gain valuable insights into organizational safety performance, foster a proactive safety culture and establish competitive advantages.
Understanding key metrics such as Experience Modification Rate (E-mod), OSHA’s Total Recordable Incident Rate (TRIR) and internal safety indicators is a way companies can identify strengths, uncover hidden risks and make informed decisions to help reduce claims, lower costs and build stronger teams.
As an industry-leading provider of workers compensation with decades of experience, Travelers has uncovered countless insights and noticed many trends. This is a common one: A business assumes its safety record is solid until the data proves otherwise. Benchmarks such as E-mod and TRIR offer critical insight into organizational safety performance and help observers pinpoint where improvements are most needed. Benchmarks can serve as guideposts for a company seeking to lower insurance premiums while strengthening its safety culture and enhancing the long-term resilience of the company overall.
What is safety benchmarking and why does it matter?
Benchmarking involves using performance data to help evaluate how a company’s safety efforts measure up against industry standards, peer organizations and its own goals. Benchmarking matters because it can help transform abstract safety data into actionable intelligence that can be used to drive measurable business outcomes. In this case, the data and insights can help companies in their efforts to reduce workers compensation costs, prevent workplace injuries, strengthen regulatory compliance and, ultimately, fortify the safety of their workforce and their bottom line.
How to get started with safety benchmarking using three primary metrics
- Internal safety benchmarks - These are forward-looking indicators such as near-miss reports, training completion rates and safety observation closures. These advanced metrics can help identify potential risks so they can be addressed before risks lead to injuries.
- Experience Modification Rate (E-mod) - A backward-looking metric that compares workers compensation claims history to industry averages – and directly influences premium.
- Total Recordable Incident Rate (TRIR) - A publicly reported OSHA metric that measures the number of recordable workplace injuries and illnesses per 100 full-time employees.
Each metric tells a different part of the story. Together, they help provide a more holistic representation of the quality of a company’s safety culture. The financial impact of improving these metrics can be substantial. For example:
- A reduction in E-mod from 1.10 to 0.95 on a $500,000 base premium yields annual savings of approximately $75,000.1
- Monitoring and improving TRIR can help identify trends and areas for safety improvements, potentially reducing costs.
Safety metrics convey a powerful message beyond mere financial implications. In many industries, an E-mod exceeding a specific threshold can prevent a business from qualifying for contract bids. Conversely, a favorable E-mod not only enhances credibility, but it may also provide a significant competitive edge.
How the E-mod is calculated
Understanding the E-mod starts with understanding how it’s calculated.
Set by the National Council on Compensation Insurance (NCCI) or a state-specific bureau, a company’s E-mod compares its actual workers compensation claims to what’s expected for a business of its size and industry. It’s based on payroll data and claims history, usually over a three-year period, with adjustments made for both frequency and severity.2
How claim frequency vs. severity affects the E-mod
Not all claims affect the E-mod equally. Although each individual incident may seem insignificant, collectively they can significantly drive up an organization’s E-mod. Frequent small claims often raise the E-mod more than a single large claim. This is because the formula places more emphasis on primary losses, which are seen as indicators of recurring issues. The amount, known as excess losses, receives less weight to help prevent a single large incident from skewing the rating.
The takeaway? Five $10,000 claims can do more damage to a business’s E-mod than one $50,000 claim. This highlights the importance of addressing frequent minor incidents through targeted safety programs, rather than focusing exclusively on preventing catastrophic events. Additionally, the unpredictability of injury severity means that even minor cuts, falls, sprains and strains can lead to significant outcomes if there is a delay in treatment or reporting. Remember, frequency can lead to severity. A pattern of small injuries might indicate that a business is heading toward a more serious incident in the future.
How does the E-mod impact workers compensation premiums?
The E-mod acts as a multiplier on businesses’ base premium. A lower E-mod reduces the total workers compensation cost, while a higher one drives it up.
| Base premium3 | E-mod factor4 | Modified premium5 |
|---|---|---|
| $100,000 | 0.80 | $80,000 |
| $100,000 | 1.00 | $100,000 |
| $100,000 | 1.20 | $120,000 |
Even a small reduction in the E-mod can deliver significant savings over time.
What are state-specific split points?
In 2024, the NCCI introduced state-specific split points – thresholds that help determine how much of a workers compensation claim impacts a company’s E-mod. These vary by state to reflect the average cost of claims in each location.6 While only the portion of a loss up to the split point is included in the primary loss calculation, any amount exceeding the split point is still factored into the overall E-mod calculation. This excess portion is adjusted based on the risk’s weighting value, which is influenced by the relative size of the risk.
For companies operating in multiple states, understanding how these thresholds work can help explain cost differences – and help avoid surprises during renewals. Here’s how split point differences can play out in practice:
How split points affect the E-mod
Split points can vary significantly by state, leading to different financial impacts for identical claims. For example, State A might have an $18,500 split point, while State B operates with a $16,000 threshold.
Consider how a $25,000 workers compensation claim would be calculated in each state:
State A breakdown:
- Primary loss - $18,500 (included in E-mod calculation)
- Excess loss - $6,500 (adjusted by the risk’s weighting value, with less E-mod impact)
State B breakdown:
- Primary loss - $16,000 (included in E-mod calculation)
- Excess loss - $9,000 (adjusted by the risk’s weighting value, with less E-mod impact)
The result? State B’s E-mod impact is higher because $2,500 more of the claim counts as primary loss. This means companies operating in multiple states face varying workers compensation costs for identical incidents.
Insurance professionals with expertise in state-specific differences can help companies understand how to allocate safety resources more effectively and better forecast premium costs based on their location footprints.
What is the Total Recordable Incident Rate?
If we think of E-mod as an internal safety report card, TRIR is a public-facing scorecard.
Defined by OSHA, TRIR tracks the number of recordable workplace injuries and illnesses per 100 full-time employees.7 It’s based on data from OSHA 300 logs – a required form that helps identify hazards, track trends and support prevention. TRIR is often available to clients, contractors and regulators and is increasingly used in procurement decisions, vendor reviews and investor assessments.
Consider OSHA compliance as the baseline, not the goal. For companies with a strong safety culture, achieving a lower TRIR is part of a broader strategy to build more resilient operations.
Why turning metrics into action helps build a proactive safety culture
Injury data shows where a business has been. Internal safety benchmarks indicate where it’s headed. Analysis of leading indicator metrics from sources like near-miss reports, safety observation closures and training completion rates provide a view into an organization’s risk profile, as well as actionable insights on where to focus mitigation actions. When companies use internal data to help reduce incidents, engage employees and foster accountability at every level, they begin to turn mere safety compliance into workplace safety culture.
Leveraging internal data not only helps transform compliance into a safety-oriented culture, but it also can yield other substantial benefits. Engaged employees generally contribute positively to safety programs and are typically more likely to remain with the company long term, make fewer mistakes and help enhance overall organizational success.8
Effective safety management demands action, not just measurement. Willful or repeated OSHA violations can result in substantial fines of up to $166,000 per infraction in 2025.9 Beyond regulatory costs, repeated workplace injuries can compound workers compensation expenses in two ways: direct premium increases and indirect operational impacts, including downtime, staffing challenges and project delays.
Businesses that adopt best-in-class safety practices go beyond the minimum OSHA baseline. Remember, aspire to meet safety best practices across your organization, not just minimum compliance.
Fostering a proactive safety culture benefits both employees and the business. By integrating safety into everyday operations, companies often experience reduced injury rates, enhanced employee morale, improved retention and stronger bottom lines.
10 strategies to help build a strong safety culture
| Strategy | |
|---|---|
| Baseline data | Regularly analyze current E-mod and OSHA logs, benchmarking against industry standards. |
| Normal for differences | Adjust benchmarking data across multistate operations, accounting for variations in state-specific regulations. |
| Set clear targets | Establish measurable goals that focus on maintaining a low E-mod and achieving industry-leading TRIR. |
| Prioritize safety culture | Ensure that leadership actively supports and is accountable for driving a safety culture, which is proven to help reduce incidents across the organization. |
| Monitor continuously | Monthly tracking of leading indicators and quarterly E-mod reviews can help enable proactive adjustments and standard improvement. |
| Establish a safety program | Implement a comprehensive safety program that includes clear safety standards, regular employee training and internal inspections or audits to help identify and mitigate potential hazards. |
| Build safety skills at every level | Train frontline workers and supervisors. Include how to spot and correct safety risks, respond to an incident or emergency, document and report safety incidents, and assign temporary duties to injured employees. |
| Inspect and investigate consistently | Conduct routine safety inspections using checklists to help ensure OSHA compliance and actively correct safety risks, respond to an incident or emergency, document and report safety incidents, and assign temporary duties to injured employees. |
| Implement a return-to-work program | Facilitate a quicker return to work or allow injured employees to stay on the job while recovering, as medically appropriate, by maintaining a structured process. This should include an immediate response plan, building relationships with local medical providers and creating a list of transitional duties to support a gradual return to work when medically appropriate. |
| Leverage a qualified team | Work with an insurance agent or broker, who can provide resources and guidance on proactive safety measures that align with business goals. |
Benchmarking as a strategic advantage
Travelers helps organizations translate data into action. Teams of specialized professionals work closely with clients to track key metrics, develop customized safety strategies and apply predictive tools that help drive better outcomes. Travelers’ unique combination of workers compensation expertise and real-time legal and regulatory monitoring helps business customers manage uncertainty, mitigate risk and stay ahead of change.
When it comes to workers compensation, a business’s ability to understand its performance against benchmarks is the first step toward meaningful improvement. Acting on the insights gained helps drive meaningful results.
To learn more about benchmark safety programs designed to help strengthen workplace performance, connect with a Travelers representative.
Sources
1,2,3,4,5,6 https://www.ncci.com/articles/documents/uw_abc_exp_rating.pdf
7 https://www.osha.gov/laws-regs/standardinterpretations/2016-08-23#:~:text=An%20incidence%20rate%20of%20injuries,Employee%20hours%20worked%20%3D%20Incidence%20rate
8 https://www.gallup.com/workplace/285674/improve-employee-engagement-workplace.aspx?utm
9 https://www.osha.gov/news/newsreleases/osha-trade-release/20250114?utm
