Program Design, "Guaranteed Cost Rating Plans"
Guaranteed cost rating programs are prospectively rated insured plans. The contractor’s premium is computed at the beginning of the policy period using an estimated exposure basis, (payroll or sales), which are then applied to rates developed by the insurance industry. These rates can be adjusted upward or downward at the beginning of the policy period but can not change during the period, regardless of the contractor’s actual loss experience. The only pricing adjustment is made at the policy expiration date to recognize actual exposures incurred, (payrolls or sales), during the policy period, (Audit).
It is important to meet your objectives and to receive all applicable discounts at the inception of the policy period. Some credits such as Premium Discounts, (a graduated percentage deduction based on the contractor’s premium level), Experience Rating, (adjusts the manual premium in accordance with loss experience), are routinely made a part of the program pricing. Others are at the discretion of the insurance companies’ underwriters and subject to market negotiation. These must be aggressively pursued.
Other benefits may include:
Small Deductibles - Rate credits received in exchange for an assumption of risk
Dividend Plans - Flat or "sliding scale" depending on loss experience
Premium Installment - Monthly payment plan rather than insurance finance