Construction Management Practice Exam

The correct answer indicates that the statement is false because the Experience Modification Rate (EMR) calculation considers both the frequency and severity of accidents. EMR is a metric used by insurance companies to determine a company's workers' compensation insurance premium. It is computed based on the company's claim history compared to the average claims of similar businesses within the industry.

The formula does take into account the frequency of incidents, but it places significant emphasis on the costs associated with those incidents as well. This means that a company with a high frequency of minor accidents may have a different EMR than a company with fewer but more costly accidents. As such, both elements are critical in the calculation, ensuring that companies are incentivized to improve both safety practices (to lower the number of accidents) and risk management strategies (to mitigate the costs of those accidents).

Understanding the EMR allows companies to focus not only on reducing the number of incidents but also on managing and minimizing the financial impact of those incidents, which further ensures safer work environments and economic sustainability.