Why did my Workers’ Comp Premium Increase?

a business owner curious why her workers' comp premium increased
Mordechai Kamenetsky
Last Updated: 
April 24, 2024

There are various reasons why your workers' comp premium might have gone up. The timing of your workers' comp premium increase can provide valuable insights into the underlying factors at play. 

Whether your premium increase happens at renewal, shortly after renewal, or at midterm, each timing signifies distinct reasons and implications for your business. Let's explore how these timing variations can impact your insurance costs and what actions you can take to manage them effectively.

Why did my Workers’ Comp Premium increase at Renewal? 

At the time of your workers' comp renewal, you might notice an increase in your insurance premiums. If your premium goes up at renewal, it can be either one of a few things. 

Carrier Rate Adjustments

Carrier Rate Adjustments

Firstly, the increase could be due to the carrier's rates going up. This adjustment in the carrier's pricing structure can directly impact your premium costs.

Experience Modification Rate (ExMod) Changes

Experience Modification Rate (ExMod) Changes

Secondly, your renewal might be incorporating a new experience modification rate, or "ExMod", which considers past claims, even those that occurred a while back. 

ExMod is a factor used to adjust your premium based on your historical loss experience compared to other companies in your industry. It reflects the frequency and severity of past claims and is a key component in determining your final premium.

Kickstand Note

Note: It's important to realize that your ExMod changes may not occur immediately after the claims, so you may not immediately realize that these were old claims finally being factored into your ExMod calculation. This delayed impact can contribute to the increase in your premium at renewal.

Why did my Workers' Comp Rates Increase shortly after Renewal?

Did your workers' comp rates increase shortly after renewal? This may have happened because your insurance carrier noticed a significant difference at audit between your projected payroll and actual payroll. Your current policy had been renewed based on the old numbers. 

Once your carrier found out that the payroll and wages were higher, they endorsed or changed the current policy to reflect the increased projections. Typically, this happens about 60-90 days after the policy is renewed.

There are a few factors that can contribute to this situation.

Higher payroll

Higher payroll

An increase in the number of full-time equivalent (FTE) employees or higher wages can lead to an increased payroll, directly impacting workers' comp rates.

Claims history 

Claims history 

If your business has experienced several workplace injury incidents or filed numerous claims, insurance companies may consider it a riskier investment, raising your rates.

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Training and safety programs

Training and safety programs

Lacking a strong safety program, proper training for employees, and a return-to-work plan can negatively impact your workers' comp rates.

To manage your workers' comp rates, it's crucial to invest in an effective safety program, ensure that all employees receive proper training, and create a comprehensive return-to-work plan for injured workers. 

Further, maintaining open communication with your insurance carrier is essential to make sure you're aware of changes that may affect your rates.

Why did my Workers’ Comp Premium Increase mid-term? 

When your workers' comp premium increases mid-term, it may indicate that your Experience Modification Rate (ExMod) is taking effect. Your ExMod, as previously mentioned, is a factor used to adjust your premium based on your historical loss experience compared to other companies in your industry. It reflects the frequency and severity of past claims and is a key component in determining your final premium.

The timing of your ExMod's impact is not always tied to your renewal date. Although your policy anniversary may differ from the date you started your current plan, your ExMod may still take effect on your original premium date. This means that if your business experienced losses or claims previously, your premium might increase during the policy term, not just at renewal.

What can I do now to improve my ExMod?

While you cannot change the past, you can take steps to improve your workplace safety culture. Start by conducting a risk assessment and establishing an action plan tailored to the identified hazards. 

Assemble a safety committee to oversee the implementation of your action plan, and prioritize communication with your employees about safety procedures.

Remember that changes in your ExMod rate won't be immediate, as the calculations are based on a three-year rolling average that doesn't include the most recently completed policy year. 

However, focusing on a safe work environment and continuously improving your safety program can lead to long-term benefits and lower workers' comp premiums.

Get a consultation from the experts at Kickstand

Are your workers' comp premiums going up, and you just don't understand why? Don't worry; you're not alone. Many business owners find themselves in a similar situation. 

Kickstand Insurance offers expert consultations to help businesses like yours figure out the complicated world of workers' compensation insurance. Our agents can analyze your claims history and help you understand the factors contributing to your rising rates. We can also help identify potential cost-saving measures or adjustments to your coverage.

Request a quote to start a conversation with us or call directly at 886-338-8823. Don't let rising workers' comp rates hold your business back; take control today with the guidance of Kickstand Insurance's experienced agents.

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Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.

Mordechai Kamenetsky

Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.

Highlight Blog Linka business owner checking workers' comp premium after a claim
Does Your Workers' Comp Go Up After a Claim? What to Know

Many business owners are concerned when they have a claim and ask us, "Does your workers' compensation go up after a claim?" The short answer is yes, it usually does. This is because insurance companies calculate your premium based on your business's experience modification rate (ExMod), which takes into account the number of claims filed. If your ExMod goes up, it is likely that your premium will also go up.

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