Calculating
Premium
How Your Premium
is Determined
Policy Premiums are determined by:
Your payroll
Type of business or business classification
Your experience modifier (if you qualify for one)
The first element considered is the payroll. If you are unsure what payroll to report, see our Reporting Payroll page. Payroll amounts determine the compensation an insurer may have to pay in the event of a claim.
The second element is the business classification assigned to you by NCCI, the National Council on Compensation Insurance. Your classification will determine the rate you pay; rates vary according to classifications as some classifications are riskier than others. The total payroll for each classification is multiplied by the rate for that classification (rate per $100 payroll) to determine the estimated premium.
The last element used to calculate premium is the experience modifier. Your experience modifier is a reflection of your company's individual loss experience compared to the experience of all other companies with similar operations. If your modifier is higher than the median, you will pay more in premiums; if it is lower, you will pay less.
Other information may be used to determine your premium, and discounts may be applied in certain situations. Your agent can explain this information to you in more detail but rest assured that they will work closely with us to ensure that you get the best rate and lowest premium possible based on all factors that are applicable to your business.
Frequently Asked Questions
What is an experience modifier?
An experience modifier is a reflection of your company's individual loss experience compared to the experience of all other companies in your state with similar operations. The National Council on Compensation Insurance (NCCI) compiles payroll and loss information on all policyholders and establishes criteria for the "average risk" for each classification code. Your individual modifier reflects a comparison of your company to the "average risk" in your state. An experience modifier uses past experience for a class of business to predict future losses. Based on your company's payroll by classification and factors developed by NCCI, we are able to determine what is known as "expected losses." If your company's losses exceed the "expected losses," your modifier will be greater than the 1.00 median. If your company's losses are less than the "expected losses," your modifier will be less than the 1.00 median, resulting in a credit to your premium.
Who qualifies for an experience rating?
Your company must have been in business and carried workers' compensation insurance for at least 2 full years before consideration is given. Once you meet the time requirement, you must meet certain premium eligibility requirements as determined by NCCI. In determining the eligible premium, it is important to note that the premium used is the "manual premium," or premium based on your base rates per class code, exclusive of any credits, discounts or prior debit modifiers. Stonetrust conducts business in these states: AL, AR, GA, IA, KS, LA, MO, MS, NE, OK, TN, and TX.
How do losses affect your modifier and your premium?
The frequency of small claims adversely affects your modifier more than a single large claim because "primary losses" are more heavily weighted than "excess losses" in the rating formula. The single large claim will have a "primary loss" of only $16,000, while the combined "primary loss" of several small claims may far exceed $16,000. Remember that each year of experience will be reflected in 3 consecutive years of experience rating, which means that a single year with numerous small claims will have an adverse effect on your modifier for 3 years. A modifier in excess of 1.00 means you will be paying more than the "manual premium" for your insurance. A modifier less than 1.00 means you will receive a discount on your manual premium in addition to any other offered by your insurer.
What can you do to control your modifier?
The single most effective way to control your experience modifier is to implement an active safety program to help reduce accidents. Stonetrust's Safety Operations Department can assist you with identifying workplace hazards and developing a safety program.
It is also important that you report all claims to our office and follow our advice regarding claims to keep claim costs as low as possible. You may choose to pay small medical only claims yourself, but those claims should still be reported to us as "notification only" claims. This is important in the event that the claim turns out to be more serious than originally thought and develops into a claim for lost time in addition to the medical portion, but it is also important because we can provide advice on how medical costs should be paid or how to handle these claims. You can reach the Stonetrust Claims Department at (800) 311-0997.