Premium Rates & How They’re Set
Premium rates are determined using two key components: claims costs and payroll.
The costs associated with workplace injuries that have occurred in the past help us project what future claims costs will be. Payroll is the second component that factors into the determination of premium rate calculation. Payroll is collected for all workers in all industries subject to coverage under the Saskatchewan Workers’ Compensation Act up to the maximum assessable per worker.
The rate setting process ensures today’s employers pay for cost of today’s claims. So premiums collected in a rate year cover all current and future costs related to claims occurring in that rate year.
- An actuarial rate model is used to determine annual industry premium rates
- Projects expected claims costs for upcoming year
- Industry premium rate = costs / payroll
Premium rates are set annually and are per $100 of assessable payroll based on the maximum assessable earnings for that year.