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Workers Compensation premiums calculation

First, the WCIRB (Workers Compensation Insurance Rating Bureau of California) groups all business and business operations into various occupational classifications. In 1995 over and above five hundred classifications existed from advertising companies to YMCA institutions. The WCRIB calculates the rate for each classification based on the insurance premium and also loss experience of all employers in each occupational classification. The rate is normally expressed in the form of dollars and cents for each $100 of payroll per classification. The basic insurance premium is calculated by multiplying the rate (for each $100 of payroll) and the amount per class. All classifications, rates and rules are already specified in the California Workers Compensation Insurance Manual published annually by the WCIRB.

A carrier might start with an insurance rate for classification and then apply credits and/or debits based on every individual risk characteristics. A policy is generally issued for a term of one year or even less and may also indicate the method of payment: monthly, quarterly, semi-annually or could be prepaid with insurance premium due on the effective date of coverage. At the insurance policy expiration, the insurance company might examine your payroll and the rates that have been used to decide the closing audited premium. This generally results in an additional insurance premium due the company or a return insurance premium to be refunded or applied to the renewal policy.

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