How L&I calculates the premium rate for an individual business
The premium rate a business pays for workers' compensation insurance is based on:
- Risk classifications assigned to the business
- Base rates for each risk classification
- Experience factor for the business
About risk classifications
L&I classifies businesses according to their levels of hazard or risk. Our system has over 300 classifications. The goal is for businesses to pay premiums based on their workers’ risk of injury. Employers in hazardous industries such as logging generally pay higher insurance rates than employers engaged in retail store operations.
Calculating premium rates
Here’s how L&I calculates the premium rate for each of the business’s risk classifications:
- Multiplying the business’s experience factor by the sum of the Accident Fund, Medical Aid Fund, and Stay at Work base rates, and then
- Adding the base rate for the Supplemental Pension Fund.
Here's a sample calculation of an individual business’s premium rate for one risk classification.
The business’s experience factor is 0.9789.
The hourly base rates for three funds (for one risk classification):
- Accident Fund: $0.0221
- Medical Aid Fund: $0.0160
- Stay At Work: $0.0003
- Supplemental Pension Fund: $0.1120
The premium rate for this business in this risk classification is:
0.9789 × ($0.0221 + $0.0160 + $0.0003) + $0.1120 = $0.1496 per hour worked.
If the business is assigned more than one risk classification, the same calculation would be made for each risk classification.
Sign up for the Claim & Account Center to view employer account and claims information such as premium rates, account balance and injured worker claim information.
Annual rate notices
In December, each business insured by L&I receives an annual rate notice summarizing insurance coverage beginning in January.
If you use a payroll service, you should share a copy of your rate notice with them.