On what basis are workers' compensation insurance costs generally determined?

Workers' compensation insurance costs are primarily determined by the location of the business and the fleet's safety record because these factors significantly impact the risk associated with providing coverage. Insurance companies assess the potential for claims based on the geographic area where a business operates, as different regions may have varying rates of workplace injuries and legal considerations affecting claims.

Moreover, the safety record of the fleet plays a critical role as it reflects how safe the work environment is and the history of accidents within the organization. A strong safety record can lead to lower premiums, while a history of frequent or severe claims can drive costs up. This comprehensive assessment helps insurers gauge the overall risk and set appropriate rates for coverage.

In contrast, while the type of industry is important, it is a broader categorization that does not consider specific operational risks within individual businesses. The number of employees and the amount of claims filed are also relevant, but they are not as directly tied to determining costs as the combination of location and safety records, which provide a more nuanced view of risk.