In Wisconsin, you almost always need to have workers’ compensation insurance to cover employees against lost wages and medical bills in case of work-related injuries or illnesses. While you may need to buy this protection for your workers and your business, you certainly have the option of taking steps to keep your premiums as low as possible. First, do you understand how Wisconsin workers comp companies calculate your premiums?
How Wisconsin Workers Comp Insurance Companies Calculate Premiums
First, look at this calculation for workers compensation premiums:
RATE TIMES (PAYROLL DIVIDED BY 100) TIMES EXPERIENCE MODIFIER EQUALS PREMIUM
You may have the ability to control two factors in the equation. These include the rate and the experience modifier:
- Rate: Insurers determine the rate by using a classification system for businesses and kinds of employees within the business. A receptionist and a welder don’t take the same sort of physical risks, so welders typically cost more to cover than receptionists. That’s reflected in the rate.
- Experience modifier: This decimal number reflects your unique company’s risk assessment, based upon its history. Claim experiences that reflect a better-than-average experience in your industry will be less than 1.00. Modifiers greater than 1.00 reflect more claims than average.
So, let’s assume your business has a $1M payroll and a .15 rate. Divide $1,000,000 by 100 to get $10,000. Multiply $10,000 by .15 to get a $1,500 premium. If your company has an average claims history for your industry, that would be the premium. Modifiers greater or less than 1.0 would increase or lower your premium.
Note that these are only simple examples and not meant to represent real-world premiums. In any case, you won’t have to do this math yourself. Your insurance agent will help you fill in the variables and perform calculations. It’s only essential for you to have a general idea of how insurers figure out your premiums.
How to Use Your Knowledge to Reduce Wisconsin Workers Compensation Premiums
Consider these examples of ways that you can work to reduce your workers’ comp premiums:
Emphasize Safety
You can’t change your company’s history to get your modifier lowered. On the other hand, you can work to improve safety in the future. You can also change the way that insurers will view your company’s safety efforts. Some steps you can take include mandatory safety training. You can also work with your insurance agent and insurer to evaluate and remediate hazards in your workplace. Since insurance professionals have experience with many companies, they can provide invaluable risk management services to small- and medium-sized businesses. Your documented safety efforts can reduce your modifier.
Ensure Correct Job Classifications
Also, make sure that you have correctly classified employees to avoid getting accidentally overcharged. Even if you run a company that performs riskier construction work, your office receptionist should not have a higher risk associated with the job. On the other hand, ensure that employees understand which tasks fall within job descriptions and which ones don’t. In some small businesses, employees tend to wear many hats. However, if your receptionist gets injured performing a task without proper training, that could impact your future modifiers.
Find Friendly Insurance Companies and a Trusted Insurance Agent
Here at Pagel & Associates Insurance, we have experience with plenty of local businesses. As independent agents, we will shop around to find the providers with the most competitive worker’s compensation rates for your Wisconsin business. We’ll also help you review job classifications to make sure you submit the right information with your application. Beyond that, we will work with you and your insurer to reduce hazards
