What effect does having poor loss experience have on an employer's Workers’ Compensation insurance premium?

Having poor loss experience refers to a high number of claims or significant costs associated with those claims in an employer's Workers’ Compensation insurance history. Insurance companies assess the risk of insuring a business based on its claims history, which plays a critical role in determining premiums.

When an employer has poor loss experience, the insurer views the business as higher risk. Higher risk typically translates into higher potential costs for the insurer, leading them to adjust premiums upward to account for this increased risk. Therefore, employers with a poor track record of claims are likely to see an increase in their Workers’ Compensation insurance premiums to offset the greater likelihood of future claims.

In contrast, good loss experience, characterized by fewer claims, can lead to lower premiums. The other options misrepresent the relationship between loss experience and premium adjustments, as poor loss experience directly correlates with elevated premiums based on the insurer's assessment of risk.