It is true that the premium for workmen compensation insurance policy changes every year. The premium is based on occupation, the wage of workers, and several other factors. Hence premiums are revised when there is an underlying change in these factors.
Factors influencing change in WC policy
Some factors that bring a change in the premium of workmen compensation insurance policy are:
Change in payroll –
The salary structure in the company changes the insurance premium. Therefore, salary appraisal brings a change in the insurance premium rates. Also, the cost of a worker’s compensation policy will rise when a business grows and has a higher payroll. There is a direct relationship between the payroll and premium.
Change in business operation
Businesses are classified according to the type of work they do. Hence, when a business changes what it does, the premium rate will also vary. This classification helps in defining which type of occupation risks poses more risk to employees. Therefore, if there is a change in business classification, the new premium code may apply. This may be higher or lower premiums.
Cost of medical services
Workmen compensation insurance policy is all about taking care of injured workers at work. Here, medical services play a crucial Thus the cost of medical expenses is a major driving force behind the high rise in premium. Factors like claim handling, medical attention given and lost wages determine the cost of a WC insurance premium. A change in the premium rates is based on the change in these factors.
Going for extra insurance cover will revise the premium rates. There are various extra covers like coverage for contractual employees, tariff rate on the total contract amount, etc.If the company opts for these extra coverages, premium rates will be revised.
Read More: How Is Premium Estimated for Worker’s Compensation Insurance? Cancellation of some covers
If the company opts out of certain additional cover then it can reduce premiums.
The experience modification factor, often known as the experience mod. or mod. factor helps in deciding the premium rates. The insurer considers the company’s claim experience to calculate the mod. factor. Claim experience of one company can be different as against the experience of other employees of similar business types and sizes. It is feasible to control your experience mod. by having good accident-prevention programs and aggressive return-to-work programs. Therefore having these measures in place will keep claims only up to medical levels and fewer claims will come up to cover the loss of income.
J.S Associates, founded by Late Jyoti Deshmukh in the year 2009, is one of the most established companies in India. It operates in wide fields of electrical and metallurgical engineering services. Over the ensuing years, it has evolved as a leading company offering value-added products and services in diverse areas like power transmission, petroleum specialists, and telecom cables.
Since its inception, the company’s workforce has doubled from 200 to 400. So, the premium of its workmen’s compensation insurance policy which it bought in 2010 also changed. In 2011, one of its workers lost his four fingers of the right hand when his gloves caught between the machine. Thereby, the insurance policy offered legal liability coverage to J.S Associates by compensating the grieved party.
Besides, J.S Associates offers a safe working atmosphere for employee safety and health protection. The company has created an infrastructure and established mechanisms to protect employees and assets by complying with international quality standards. Furthermore, periodic training, emergency mock drills, safety campaigns, and inspections are conducted for ensuring employee safety.
Hence, these safety measures have lowered the incidents of accidents in the company. Moreover, it has also helped in getting lower workmen compensation insurance premium rates. Additionally, considering the number of safety measures adopted by the company, the insurer has also cut the premium of its workers’ insurance policy.