Understanding Workers’ Compensation Premium

NYSIF, like private insurance carriers, bases premium charges on assumed risk depending upon:

  • employer's industry type,
  • remuneration,
  • prior claims history,
  • and/or the potential liability for future claims.

The NY Compensation Insurance Rating Board designates a classification code for each type of industry or business and determines the loss cost for each classification code by computing the portion of the rate related to losses. Each individual insurer applies its own expense factor, a loss cost multiplier, to the applicable loss cost to determine the complete rate.

The NYSIF manual rate (loss cost times the NYSIF loss cost multiplier) is then applied to remuneration. This includes payroll and all other remuneration paid or payable during the policy period for the services of employees and all others engaged in work on behalf of the employer for which NYSIF could be liable. The rate charged is based on every $100 of remuneration.

NYSIF standard premium is then arrived at by applying the promulgated experience rating for each individual risk. The standard premium may be further adjusted by the NYSIF modification, a discount reducing premium, or a differential, a surcharge increasing premium.

While the primary components in determining workers’ compensation premium are classification, remuneration, experience rating and carrier modifications, there are a number of additional components used to determine final premium. Other charges include: an expense constant, the NYS assessment charge, natural disaster and catastrophe premium, and terrorism premium charge.

The calculation of workers’ compensation premium contains many components, so be sure to compare the bottom line when reviewing competitive quotes.