The process of determining a business’s workers’ compensation premium starts with establishing a baseline rate for the industry in which the business operates. This rate is then adjusted based on the company’s actual history of workplace injuries and associated costs. The result of this adjustment is a multiplier that either increases or decreases the premium relative to that baseline. For example, a company with a history of fewer and less costly claims than average will have a multiplier below 1.0, leading to a reduced premium. Conversely, a company with a worse-than-average safety record will have a multiplier above 1.0, resulting in a higher premium.
The adjusted premium rate serves as a significant incentive for businesses to prioritize workplace safety. Lower premiums translate directly into reduced operating costs, freeing up capital for other investments. Moreover, a favorable safety record can enhance a company’s reputation, attracting both employees and customers. Historically, these adjustments have been implemented to ensure fairer premium allocation and to encourage employers to actively mitigate risks in their workplaces.
