Workers’ compensation premium calculations begin with payroll, either estimated or audited. But for the purpose of this discussion, let’s assume perfect knowledge of the annual payroll amount and sources.
Regular payroll is divided into classification codes. Less risky jobs, like clerical operations, enjoy a lower premium rate than higher risk jobs like bridge painting.
Consult with your professional agent for help in auditing your class codes for accuracy. Time and technology can change your code. Recheck them every three years at a minimum. You can go back three years to adjust audits and receive return premiums.
Premium for overtime payroll can be reduced if overtime pay is kept separately. Auditors will discount the overtime payroll substantially, keeping your premium lower.
Consider subcontracting more hazardous operations. For example, many manufacturers keep a fleet of delivery vehicles. Review the cost and benefits of in-house shipping versus common carrier service. Bad claims experience with one driver can adversely affect the experience modification of one hundred factory workers. Loss control for the manufacturing staff is much more straightforward than the randomness of events on the road.
Isolate potential operations which are more likely to create loss issues. Loss control the operations thoroughly or transfer the risk by subcontracting.
Insist subcontractors provide their own insurance by keeping a certificate of insurance on each subcontractor. Auditors pick up uninsured subcontractors and charge premium accordingly.
Consider all subcontractors: HVAC repairs, caterer, installers, contract electrician, temporary help agencies, any independent contractor or hauler.
Prepare for audits constantly. Compile a list of certificates of insurance and have them handy for the auditor.
