Part Five states that which item, shown on the information page, is determined by multiplying a rate times the premium basis?

Part Five states that which item, shown on the information page, is determined by multiplying a rate times the premium basis?

• A. Experience Mod
• B. Premium Basis
• C. Loss Ratio
• D. Estimated Premium

Answer: (D)

In workers’ compensation pricing, the amount used to estimate what you’ll pay is found by multiplying the rate by the premium basis. The rate is the cost per unit of exposure for a given job classification, and the premium basis is the amount of exposure—typically payroll—that the rate applies to. Multiplying these gives the estimated premium, the initial expected premium shown on the information page before adjustments. The Experience Mod is an adjustment based on past losses that changes the final premium, not the product of rate and basis. The Loss Ratio compares losses to earned premium, a performance metric rather than a calculation step for the estimated premium. The Premium Basis is the exposure amount itself, not the result of the multiplication.

In workers’ compensation pricing, the amount used to estimate what you’ll pay is found by multiplying the rate by the premium basis. The rate is the cost per unit of exposure for a given job classification, and the premium basis is the amount of exposure—typically payroll—that the rate applies to. Multiplying these gives the estimated premium, the initial expected premium shown on the information page before adjustments. The Experience Mod is an adjustment based on past losses that changes the final premium, not the product of rate and basis. The Loss Ratio compares losses to earned premium, a performance metric rather than a calculation step for the estimated premium. The Premium Basis is the exposure amount itself, not the result of the multiplication.