What is the definition of Manual Premium?

What is the definition of Manual Premium?

• A. A final charge for workers' compensation
• B. A starting point for rating in workers' compensation
• C. A premium adjustment based on claims history
• D. A fee added to excess loss claims

Answer: (B)

The definition of Manual Premium pertains specifically to workers' compensation insurance. It serves as a starting point for rating in this type of insurance, meaning it is the base amount that insurance companies use to set premiums based on the risk associated with different types of jobs and industries. Manual Premium is determined using classification codes, which categorize employers based on the nature of their business activities. This base rate reflects the likelihood of claims being filed for that particular business type and is adjusted according to other factors, such as the individual employer's claims history or payroll data. Therefore, the Manual Premium is critical in establishing a foundation for premium calculations before any adjustments are made. Other options provided in the question relate to different aspects of the insurance process, but none constitute the definition of Manual Premium as it functions in workers' compensation insurance.

The definition of Manual Premium pertains specifically to workers' compensation insurance. It serves as a starting point for rating in this type of insurance, meaning it is the base amount that insurance companies use to set premiums based on the risk associated with different types of jobs and industries.

Manual Premium is determined using classification codes, which categorize employers based on the nature of their business activities. This base rate reflects the likelihood of claims being filed for that particular business type and is adjusted according to other factors, such as the individual employer's claims history or payroll data. Therefore, the Manual Premium is critical in establishing a foundation for premium calculations before any adjustments are made.

Other options provided in the question relate to different aspects of the insurance process, but none constitute the definition of Manual Premium as it functions in workers' compensation insurance.