How is Premium Calculated?
The WCRA charges annual premium each year sufficient to cover its expected reinsurance liability and associated expenses for that year. Each member's premium is based on the member's Minnesota workers' compensation exposure (exposure base) and the reinsurance rate for the retention level selected by the member. The WCRA calculates premium by multiplying each member's exposure base by the applicable reinsurance rate.
Every September, the WCRA Board of Directors determines the rates to be used to calculate the reinsurance premium for the next year. The rates correspond to the three retention level options (low, high, and super). Members who select the low retention limit are charged the highest rate due to the WCRA’s increased risk of exposure, with decreasing risk and decreasing rates for the high and super retention levels. In structuring the rates, the Board considers the effect of investment income in reducing the amount of premium revenue required to reimburse members for ultimate loss payments. A 2 percent premium tax is applied to all Self-insurer charges. Rates must be approved by the Commissioner of the Minnesota Department of Labor and Industry. To see current and historical WCRA rates click here.