Use negative numbers (e.g., -10) for credits/discounts.
Standard volume discount based on premium size.
Base Premium:$0.00
Modified Premium (after E-Mod):$0.00
Standard Premium (after Adjustments):$0.00
Final Estimated Annual Cost:$0.00
Effective Net Rate (per $100):$0.00
function calculateNetRate() {
// 1. Get input values
var payrollInput = document.getElementById('wcPayroll').value;
var baseRateInput = document.getElementById('wcBaseRate').value;
var emodInput = document.getElementById('wcEmod').value;
var scheduleModInput = document.getElementById('wcScheduleMod').value;
var premiumDiscountInput = document.getElementById('wcPremiumDiscount').value;
// 2. Validate and Parse
var payroll = parseFloat(payrollInput);
var baseRate = parseFloat(baseRateInput);
var emod = parseFloat(emodInput);
var scheduleMod = parseFloat(scheduleModInput);
var premiumDiscount = parseFloat(premiumDiscountInput);
// Validation: Check for required fields
if (isNaN(payroll) || payroll <= 0) {
alert("Please enter a valid Payroll amount.");
return;
}
if (isNaN(baseRate) || baseRate <= 0) {
alert("Please enter a valid Base Rate.");
return;
}
// Set defaults if empty/invalid for optional fields
if (isNaN(emod)) emod = 1.0;
if (isNaN(scheduleMod)) scheduleMod = 0;
if (isNaN(premiumDiscount)) premiumDiscount = 0;
// 3. Logic Calculations
// Base Premium = (Payroll / 100) * Base Rate
var basePremium = (payroll / 100) * baseRate;
// Modified Premium = Base Premium * E-Mod
var modifiedPremium = basePremium * emod;
// Apply Schedule Rating (Credit/Debit)
// Schedule Mod is a percentage. -10 means 10% credit.
var scheduleFactor = 1 + (scheduleMod / 100);
var standardPremium = modifiedPremium * scheduleFactor;
// Apply Premium Discount
// Premium Discount is a reduction percentage. 5 means 5% off.
var discountFactor = 1 – (premiumDiscount / 100);
var finalPremium = standardPremium * discountFactor;
// Net Rate = (Final Premium / Payroll) * 100
var netRate = (finalPremium / payroll) * 100;
// 4. Update UI
document.getElementById('resBasePremium').innerHTML = formatCurrency(basePremium);
document.getElementById('resModifiedPremium').innerHTML = formatCurrency(modifiedPremium);
document.getElementById('resStandardPremium').innerHTML = formatCurrency(standardPremium);
document.getElementById('resFinalPremium').innerHTML = formatCurrency(finalPremium);
// Net Rate Display
document.getElementById('resNetRate').innerHTML = '$' + netRate.toFixed(2);
// Show results container
document.getElementById('wcResults').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
Understanding Workers' Compensation Net Rate
Calculating the Net Rate for workers' compensation insurance is essential for business owners and financial controllers who need to budget accurately for labor costs. While the "Manual Rate" (or Base Rate) gives you a starting point based on your industry classification codes, the Net Rate represents the actual cost you pay per $100 of payroll after all factors are applied.
How the Calculation Works
The transition from a Base Rate to a Net Rate involves several mathematical steps that reflect the unique risk profile of your business:
Base Premium: This is calculated by dividing your total annual payroll by 100 and multiplying it by the Class Code Base Rate assigned to your industry.
Experience Modification Factor (E-Mod): This factor compares your company's claim history to the industry average. An E-Mod of 1.0 is average. Below 1.0 indicates a better-than-average safety record (resulting in a credit), while above 1.0 indicates higher claims frequency or severity (resulting in a debit).
Schedule Rating: Underwriters may apply schedule credits or debits based on specific characteristics of your business, such as safety programs, management experience, or premises maintenance.
Premium Discounts: Insurance carriers often provide automatic discounts for larger premiums, recognizing the economies of scale in administering larger accounts.
Why Net Rate Matters
The Net Rate is the most accurate metric for comparing insurance quotes from different carriers. One carrier might offer a lower Base Rate but apply fewer credits, resulting in a higher Net Rate. Conversely, a carrier with a higher Base Rate might offer significant Schedule Credits for your robust safety program, resulting in a lower Net Rate and total cost.
Improving Your Net Rate
To lower your workers' compensation Net Rate over time, focus on:
Maintaining a safe workplace to keep your E-Mod below 1.0.
Implementing formal return-to-work programs.
Ensuring accurate payroll reporting and proper classification coding.
Shopping your policy with carriers that specialize in your specific industry vertical.