How is Worker's Compensation Insurance priced?

In order to determine the actual rate charged for each class code, individual insurance companies use a loss cost multiplier or LCM. The insurance company LCM includes operating expenses and a profit factor.

If one insurance company has an LCM of 1.250 and another company has an LCM of 1.667 there will be a difference of 33% between their prices.

For Example: A loss cost rate of $1.30 times an LCM of 1.250 = a price of $1.63; a loss cost rate of $1.30 times an LCM of 1.667 = a price of $2.17.

Amazingly enough, even though each company starts from the same basic loss cost rate, the actual premium charged can easily vary more than 50%. In some cases it can be double! You might wonder why! Well, it’s really quite simple. Some insurance companies are better run than others. They might have a more efficient method of securing and keeping customers and/or they must do an excellent job of initiating safety programs to keep their losses low. Also, they might have more modest profit goals. Some insurance companies charge even less than the basic Loss Cost Rate, so their LCM's are lower then 1.000.

The states listed below are immediately available for LCM. For states not listed, please contact our marketing consultants to determine availability.