What could potentially lead to an increase in an employer's WC premium rates?

An increase in an employer's workers' compensation premium rates could be predominantly influenced by an increase in workplace accidents. This is because workers' compensation insurance premiums are generally calculated based on the risk associated with the employer's operations. If there is a higher frequency of accidents, it indicates a greater risk for the insurer, often leading to higher premium rates to cover the increased likelihood of claims being filed.

When workplace accidents occur, they typically result in more claims for compensation, which financial metrics directly affect the cost for the insurer and, consequently, the premium for the employer. Insurers assess the loss experience—such as the number of claims and the total costs associated with those claims—when determining rates, and a rise in such claims typically leads to significantly increased premiums.

In contrast, other factors such as reduced employees' work hours, lower industry wages, or the adoption of new technology may not necessarily correlate with increased premium rates. Reduced work hours might decrease exposure to risk, potentially lowering premiums. Similarly, lower industry wages can reduce the overall cost of claims since workers' comp benefits are often tied to earnings. The adoption of new technology could improve workplace safety and efficiency, potentially resulting in lower accident rates and, hence, lower premiums.