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How is my Worker's Comp premium determined?
Your premium is based on a combination of your ESTIMATED employee payroll for the next 12 months and the class code that is determined for your type of operation.
- Is my policy auditable?
Most Worker's Comp policies are subject to a audit because your premiums are based on an ESTIMATED amount of payroll. Once the policy period has ended the insurance company will send out an audit form. If your ACTUAL payroll is
more than the estimated, then you will be sent a bill for the difference at that time. If it is below the estimated, then most insurance companies would issue a refund, up to the minimum premium for your class.
- What is a class code?
There is a set list of class codes that have been determined to serve all industires. Your class code is determined by the Worker's Comp Rating Bureau (www.wcirb.org) and is based on the duties being formed by your employees
as well as your business type. Each class code generates a different factor, based on risk, and this factor is mulitplied by your payroll to determine a premium.
**For a list of class codes please visit www.wcirb.org
- What is a Modification Factor?
A Modification Factor is also known as an Experience Modification Rating, EMR, Experience Modifier, or just the Mod. This is an adjustment that is made to the Workers' Compensation insurance premium of companies that
meet or exceed a certain size threshold. This threshold is measured in manual premium and varies from state to state. But typically, a company that has been paying $5,000 in manual premium for the past few years or
has paid $10,000 or more in a single recent year qualifies to be experience rated.
This means that an adjustment factor will be calculated for such a company based on prior years' payroll and loss data, essentially comparing the loss data of that particular company to average loss data for all other employers in that state who share the same classification codes.
In the State of California this factor is determined by the Worker's Comp Rating Bureau (WCIRB).
- What is an ARD?
Your Anniversary Rating Date is the date that your policy first became effective. It tells you when your policy renews every year. If you change the effective date of your policy then your ARD will change to match that. A lot of insurance companies don't like to switch
Worker's Comp policies mid-term because it changes the ARD.
- What is risk management?
Risk management is a service that is meant to help your company identify and reduce workplace risks and in doing so reduce your chances of Worker's Comp claims.
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