How are insurance premiums calculated for staffing agencies?
Understanding how your insurance premiums are determined is essential for managing your staffing agency’s bottom line. At Wright Risk, we believe in transparency regarding the variables that influence your costs. While some factors are industry-wide, others are directly tied to your specific operations. Here is a breakdown of how we calculate your total insurance investment.
Payroll and Workforce Size
The primary foundation for most of our premium calculations is your total annual payroll. Because payroll represents your overall exposure, higher wages or a larger volume of temporary employees generally lead to higher base premiums. We use estimated figures at the start of the policy period and reconcile them through an audit at the end to ensure accuracy.
Employee Classification Codes
Not all jobs carry the same level of risk, which is why we utilize classification codes. An office clerk has a lower inherent risk than a light industrial worker, and the rates reflect that difference. We carefully assign these codes based on the specific tasks your employees perform, ensuring you pay a rate that accurately matches the exposure.
The Experience Modification Factor
Your claims history is a significant driver of your premium through the Experience Modification Factor, or "e-mod." This figure compares your actual losses to industry averages for your size and sector. A history of safe operations results in a lower e-mod, which acts as a discount on your premium, while frequent claims can lead to higher costs.
Safety Programs and Risk Management
We also consider the strength of your internal safety protocols when evaluating your risk profile. Agencies that implement robust training and incident-prevention measures demonstrate a proactive approach to reducing future claims. By investing in these areas, you not only protect your workers but also signal to us that your agency is a lower-risk partner for long-term coverage.
Managing insurance costs is an ongoing process that requires a strategic approach to safety and documentation. By understanding these key pillars—payroll, classification, and your e-mod—you can take active steps to lower your agency's overhead. Wright Risk Management is here to help you optimize your risk profile and secure competitive rates. For a detailed review of your current policy or to learn about our risk management tools, reach out to us today.
