Workers compensation

Workers’ compensation insurance is necessary for any business risk management plan. Workers’ compensation insurance covers medical costs, missed earnings, and disability benefits if an employee gets hurt or ill at work.

However, the workers’ compensation insurance cost might differ significantly depending on the business sector. 

This article discusses the factors determining workers’ compensation premium rates and how this differs when comparing industries.

Factors that Affect Workers’ Compensation Premium Rates

Level Of Risk Associated with The Industry

The level of risk associated with the industry and the employer’s claims history are the main determinants of workers’ compensation insurance costs. Insurance firms usually evaluate the level of risk involved in various businesses using a range of statistical models and actuarial data. They consider variables like the frequency and seriousness of work injuries, the nature of the task, and the workforce size.

The claims history

Businesses that have a history of filing numerous claims or incurring high claim costs will often pay higher premium rates than those with a clean claims history. Insurance companies determine premium rates based on an employer’s claims history using an experience modification factor (EMF). A higher EMF implies that the employer has experienced more claims or higher claims expenses, which may raise their premium rates.

Government Regulations

State governments set the premium rates for workers’ compensation insurance. Workers’ compensation rules and regulations vary from state to state, where they dictate how insurance firms set premium prices. In some states, insurance providers may be required to set the same rates for all employers in a given sector. Others permit insurance companies to determine their premiums by comparing industries, evaluating risks, and checking the claim history.

Comparing Premium Rates Across Different Industries

Depending on the industry, premium costs for workers’ compensation insurance can vary significantly. Construction and manufacturing are two examples of high-risk businesses, and their premium rates will often be higher than those of low-risk industries like retail and professional services.


Due to the task’s physical demands and heavy equipment usage, construction workers are at a high risk of workplace injuries. Therefore, the Construction industry typically pays higher premium rates than the average due to the high risks of injury involved with this line of work.


In the manufacturing industry, Workplace injuries vary from moderate to high. Employees in tasks involving heavy machinery, chemicals, or repetitive motions are at a higher risk of injuries or illness. Therefore, workers in manufacturing injury typically pay higher premiums than the average premium rates. However, employers in the manufacturing sector can lower their premium rates by adopting safety programs and educating staff members on proper safety measures.

Health Care

Healthcare industry employees are also at a higher risk of workplace injuries and illness due to the risk of contracting contagious infections and moving patients. However, the healthcare sector can lower its premium costs by introducing safety initiatives and equipping staff with personal protective equipment (PPE).

Retail and Professional Services  

In retail, slips, falls, and moving big things are the primary cause of workplace injuries. Therefore, Retail businesses typically pay premiums that are below the average. However, this does not mean that employers in the retail industry should not prioritize safety measures to avoid workplace accidents and lower their claim history. When comparing industries, the premium rates are often lower for employees in professional services, such as finance, law, and consulting.


Even though various factors determine the workers’ compensation premium rates, some industry sectors have a higher risk of accidents than others. However, employers can lower the workers’ compensation premium rates by implementing the necessary safety measures at the workplace.


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