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Workers' Compensation Insurance

May 19th, 2011

Introduction to Workers Comp Premium

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Martin Summers

Insurance Agent

The cost of workers’ compensation insurance depends on the nature of your business and your claim history.

A basic idea of the workers’ compensation insurance market is that a group of businesses are sharing the risk of experiencing a loss. Your “group” is made up of other businesses in your same industry classification.
Each industry classification, or class code, has a different insurance rate based on its employees’ exposure to risks in the workplace. The rate is applied to every $100 of payroll. The rates in Florida are set by the state bureau after receiving NCCI‘s actuarial recommendation.

Generally, the more hazardous the operation, the more losses can be expected, leading to higher-than-average rates. In the example below, you can see the difference that the class code rate makes on two companies’ starting premiums:

Florida Workers Compensation Manual Premium Calculation

This is called the “starting premium” or “manual premium” because there are many other factors that can increase or decrease this amount. If your businesses qualifies (based on minimum premiums paid in the past), your account will be subject to experience rating, which calculates a credit (or debit) factor based on your experience (claim history), compared to other members of your industry classification in your state.

Businesses may have additional pricing factors applied by participating in sponsored trade programs and safety groups. It is also possible to save money by participating in state premium credit programs, such as:

There are many components of pricing that may apply on a risk-by-risk basis. Feel free to contact us with any questions about the way your workers compensation policy premium is calculated.

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