Chapter 4 – Computation of Premium

Insurance companies rely on selecting enough policyholders and charging the policyholders an adequate premium for coverage to maintain a sustainable company to pay losses and earn a fair profit. When a Workers Compensation insurance policy is issued, the insurance company issues the policy with an “estimated premium” based upon many different factors.

In Chapter Four, we study the computation of premium and how to budget the cost of insurance affects the cost of operations. We review how to factor the premium into every job, sale, development, business plan, salary, or wage – just like rent, taxes or materials. We look at:
• how an insurance company arrives at a final premium;
• what an employer should do to get any “deserved” discounts; and
• the unique exceptions in calculating premiums in Tennessee.

-Check out the Introduction video for Chapter Four-

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