What should employers consider when calculating the costs associated with Workers’ Compensation insurance?

When calculating the costs associated with Workers’ Compensation insurance, employers should focus significantly on claims history and payroll data. This is because claims history reflects the past frequency and severity of workplace injuries within a company, which directly influences the premium rates set by insurers. A higher number of claims can result in increased costs, as insurers consider the risk level of insuring that employer.

Additionally, payroll data is essential in determining the overall exposure for the insurer. Premiums for Workers’ Compensation are often calculated based on the total amount of payroll, with different job classifications carrying different rates based on the inherent risk of injury in those roles. By analyzing both claims history and payroll data, employers can gain a clearer picture of their financial liabilities in relation to Workers’ Compensation and make informed decisions about coverage and risk management.

While state employment regulations, employee benefits packages, and market competitiveness are all important considerations for employers, they play a more indirect role in the calculation of Workers' Compensation costs compared to the direct impact of claims history and payroll data. Thus, focusing on these two elements provides the most relevant and immediate factors affecting insurance costs.