Workmen Compensation

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The premium (tariff) is governed by the type of cover selected by the proposer as decided by the insurance regulator in India’s IRDA.

Following two types of covers are available under Workmen (now Employees) Compensation Insurance:

  • Table A: Indemnity against legal liability for the accident to employees under
  • Table B: Indemnity against legal liability
    • Fatal Accident Act 1855
    • Common-Law

The policies in the first case (Table A) can be extended to cover the contractual workers as well. However, the premium is further dependent on various factors, such as:

  • The nature of business,
  • The number of the employee base,
  • The location of the workers,
  • Whether the occupational disease is covered
  • The wages before deductions of the workers (including lodging expense if provided by employer)
  • Term of the Policy (12 months or more)

Premium Ratings

  • The minimum premium in the case of household servants is Rs. 10 in any other case indeed, it must be Rs. 20.
  • If the insured covers multiple types of risks ( for instance, workers in electrical and workers in the mechanical department) under one policy. Similarly, the minimum premium should be Rs. 30
  • The occupational tariff rates are provided from time to time by Insurance Information Bureau of India (IIB). Therefore, which can be referred to for the details of premium estimates for each type of work, business, occupation of the workers/employers in consideration. This is also called “Book Rate”.
  • The maximum amount of wage to be considered while the calculation is Rs. 12,000 p.m. and for the additional wage the premium should be estimated based on 6.25% of the book rate for the occupation, subject to the following minimum limits:
    • 2 per mille (thousand) per annum for workers engaged in manual labor
    • 1.2 per mille (thousand) per annum for clerical staff not engaged in manual labor
  • Medical expense (if covered) limit including the cost of ambulance increases the premium in the following manner:

Expense per case! (Rs.)

Premium Increase over Book Rate

80

12.5%

120

15.0%

160

17.5%

400

20.0%

800

25.0%

1600

35.0%

2400

45.0%

Payable by the insurance policy

  • Occupational diseases are covered at an additionally, premium of 50% of the book rate
  • The premium calculated likewise is per case and should be multiplied by the number of employees or workers. That is, to be covered to arrive at the final premium.
  • If the average wage of the employee exceeds Rs. 50,000 per annum special tariff rates (lower than normal book rate) may apply.

See: What is covered under workmen compensation insurance policy

Case on Workmen Compensation Policy Premium

Shoumik Das is working with an insurance advisor to work out the minimum premium basically, for the worker’s compensation policy for his firm. Moreover, Shoumik is a civil contractor and employs about 70 workers and supervisors at any time for the work.

Since the wages of these workers vary throughout the year, his advisor Chaitali asks him to estimate an average compensation for the past year (12 months) to understand the average liability of the insurer in case of a claim.

The average age of his employees is 37 years. Shoumik has not faced any major accidents involving his workers or machinery. Due to, stringent security processes implemented by him.

Shoumik has selected the insurance cover under Table A for his workers, and furnishes the following information (all numbers are daily average for the past 12 months):

  • Employees engaged in loading and as well as unloading vessels: 15 (Avg. wages past 12 months: Rs. 75,000)
  • Workers engaged in Building towers and buildings: 35 (Avg. wages past 12 months: Rs. 75,000)
  • Woodworker/carpenters engaged: 10 (Avg. wages past 12 months: Rs. 80,000)
  • Agriculturists (botanists or gardeners): 4 (Avg. wages past 12 months: Rs. 60,000)
  • And, other employees: 6 (Avg. wages past 12 months: Rs. 100,000)

The premium quoted by the insurer to cover Shoumik’s staff for 12 months is Rs. 48,595 and besides,  Rs. 66,780 under Table A. Therefore, the first option does not cover occupational diseases and sub-contractors.

Shoumik has the option to exclude (or reduce) medical expenses (currently included at Rs. 20,000 p.a.) under the policy which will decrease the premium accordingly.