Critical Factors in Reducing Manufacturers’ Workers’ Comp Costs

As most business owners are aware, workers’ comp costs can be one of the most costly expenses. Further, industries that face particularly high levels of risk with large payrolls tend to pay more for their premiums, such as manufacturers and importers. However, there are some viable solutions available to reduce their Bergen County Manufacturers’ Workers’ Comp costs.

In addition to implementing a safety program in the workplace, leadership training and commitment, loss control, claims review, ongoing employee communication, and effective return-to-work strategies, it is beneficial for business owners like you to understand exactly how premiums are calculated to cut costs. This way, you will be able to identify the areas that could use some improvement.

Job Classifications

Put simply, each state has a code for each industry and job duty. These are further classified by the business type within that industry and then job duties within that business.  These codes signify how much the premium will cost in correlation with the risks faced by those jobs. For example, the compiled data from this industry might indicate that people who work under one code are more inclined to injury than another code, thus costing more to insure.

Therefore, these job duties must be explicitly written and closely examined. Each employee needs to be classified accordingly and accurately. Consult with your trusted nj manufacturers insurance agent for more information.


Traditionally, for each $100 dollars of your payroll, a specific rate is assigned based on the classification of your employees. Workers’ comp premiums are calculated annually and businesses are given an Estimated Annual Premium (EAP), which may differ from the actual payroll. At the end of the year, an audit will determine if the business will owe additional fees or if they will receive a premium credit based on their payroll.

Experience Modification Factor

An experience modification factor adjusts an employer’s premium to reflect the difference between the employer’s loss experience and the average experience that is expected for its classification(s) and size, says Workers’ Compensation Board. This is unique to each business. Essentially, this gauges the “health” of your company.

This overview of workers’ compensation can assist you in determining how these costs are calculated which will help you keep the costs to a minimum. As this process is complex, contact our experts at David G. Sayles Insurance Services for assistance in navigating your manufacturers’ workers’ comp program. Our commitment to your success and focus on customer service has allowed us to serve business owners like you for the last 35 years. For more information, contact us today at (855) 977-1842.