How Your Premium is Determined
Stonetrust uses the following criteria to determine your policy premium:
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.
While these three elements are fundamental to determining premiums, other factors can be used as well. Stonetrust may apply discounts to policy premiums if acceptable terms are satisfied.
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 modifier is to implement an active Safety Program designed to eliminate careless losses. Stonetrust's Safety Operations Department can assist you with this program.
While all claims must be reported to our claims office, you may choose to pay small medical-only claims yourself. If this is the case, you should file the claim as "for information only" with our claims office. 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. You can reach the Stonetrust Claims Department at (800) 311-0997.