How premium is determined

<< back to Policy information

There are three major elements involved in determining premium. Your initial premium is calculated by multiplying your total annual payroll for each business classification code (or combination of codes) assigned to your policy by the rate per $100 of payroll for each class code.

Classification codes

Subject to a few exceptions, classification codes are assigned based on the overall nature of business and not on the separate occupations or operations of individual employees within the business. For example, most restaurants have wait persons, cooks, dishwashers, and cashiers but the payroll for all restaurant employees is reported under one classification code - 9082, Restaurants.  

Rates

The National Council on Compensation Insurance (NCCI) develops a rate per $100 of payroll for each classification code.

Rates may fluctuate from year to year, and are effective on January 1.  New rates are applied on the issue date of a new policy or on the renewal date of an existing policy.

Payroll and substitutes for payroll

In the workers compensation system, payroll includes wages and substitutes for wages.  For more information about payroll and substitutes for payroll see Gross Payroll.

Payroll reported for workers compensation purposes may not be the same as payroll reported for tax purposes.

Other factors affecting premium

Alcohol and Drug-Free Workplace Credit

Idaho Code section 72-1716 allows insurance companies to grant a premium credit to employers who have a qualifying alcohol and drug-free program.  The premium credit is applied at the year-end audit.
Idaho Code section 72-1716. Qualification of employer premium reduction

If you have an Alcohol and Drug-Free Workplace program, you can provide a written statement, on your company letterhead, to the State Insurance Fund indicating that your program complies with Idaho Code sections 72-1701 through 72-1715.  You should have your legal counsel review your program or consult with a drug testing service to ensure your program complies with the law.
Idaho Code section 72-1701. Purpose and intent of act
Idaho Code section 72-1715. Public entities may conduct program

Since the purpose of the credit is to reduce the effects of drugs and alcohol in the workplace, the State Insurance Fund also requires your program to:

• Be proactive as opposed to reactive
• Some examples of proactive program methods are pre-employment testing, random testing, and testing prompted by reasonable suspicion identified by a trained supervisor.
• An example of a reactive program is one that limits testing to post accident situations.
• Include 100 percent of your employees covered by the workers compensation policy in the testing program
• Have written documentation of how the testing is accomplished.  This documentation must be provided to the State Insurance Fund.

Experience modification

The National Council on Compensation Insurance (NCCI) calculates an experience modification (e-mod) for policies with average annual premiums of $3,000 or more.

• E-mods less than 1.00 indicate that past loss experience is less than expected and the current premium is reduced.
• E-mods above 1.00 indicate that past loss experience is more than expected and the current premium is increased.
• E-mods are based on the first three of the last four completed policy years.

Premium discount

The rating organization for Idaho (the National Council on Compensation Insurance) allows a premium discount for the portion of annual paid premium over $10,000 according to the following schedule:                         

Increased limits of liability

There is an additional premium charge to increase the standard limits of liability. Please contact your underwriter for details.
Standard Limits of Liability

Waiver of Subrogation

Upon the request of a policyholder, the State Insurance Fund may add a Waiver of Subrogation endorsement to a policy.

The waiver will apply to a specific scheduled work site and a specific third party.  There is an additional premium charge for a Waiver of Subrogation.

Disease charge

Certain exposures related to some classifications may be subject to a supplemental premium charge called a Disease Charge.   If you have a Disease Charge classification code on your policy, you should report applicable payroll in this classification code as well as in the regular class code.

<< back to Policy information