How do insurers set premiums for workman’s comp insurance? They are based in part on the business of the business, or the organization’s trade. More dangerous industries such as mining or construction are likely to pay much larger premiums than a tax firm.
Location Now a Factor
Following the World Trade Center attacks on Sept. 11, 2011, workers comp insurers began more closely examining a company’s risk of both man-made and natural disasters. This has led insurers to include location as part of the risk factor, which means higher premiums for businesses in “high-risk” areas.
For premiums above a set amount, insurers typically will compare the company claims history with others in the same industry. If a business has more claims than others in the same category, its premiums will likely be raised; if its claims are lower than others, premiums are likely to be decreased.
Company history is more responsive to the number of claims vs. the dollar amount of claims. Insurers have found that the more accidents a company has, the greater its likelihood of experiencing bigger losses because overall conditions are not as safe.
You will always have workman’s comp insurance premiums. It’s the law. But now you know there are some means of making premiums more manageable.