Premium Rates & How They’re Set
Premium rates are determined using two key variables: claim costs and payroll. Claim costs are affected by an employer’s injury rate and duration. Injury rate measures frequency of injury and is the number of claims divided by the number of workers covered. Duration measures the severity of claim and how quickly the worker returns to work. Payroll is the other component that factors into the determination of premium rate calculation. Payroll is collected for all workers subject to coverage under the Act up to the maximum assessable per worker.
The rate setting process ensures today’s employers pay for the cost of today’s claims. So premiums collected in 2016 will cover all current and future costs related to claims occurring in 2016.
Our rate model:
- 5 years for wage loss
- 3 years for health care and vocational rehabilitation costs
Premium rates are set annually and are per $100 of assessable payroll based on the maximum assessable earnings for that year.
2017 Premium Rates & Industry Statistics