How are workers compensation premiums calculated?
Workers’ comp insurance premiums are generally determined by the workers’ comp classification. Each classification is assigned a rate or loss cost, based on insurer experience with that business type, which strongly affects a business’s final premiums. Consequently, it’s essential that companies receive the correct classifications, of which there are some 600. A company’s safety record also affects a company’s workers’ comp premiums. If an insurer finds a company’s record is better than the industry average after performing a risk evaluation, the business’s premiums could be reduced. If its record is worse than the average, the reverse can happen.
