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Manual Premium – What is It and How Is It Calculated?


Manual Premium Term Of The Day

A Workers Comp Manual Premium is calculated using the classification code payroll multiplied by the assigned manual rate for that code and then divided by 100. As an example, if class code 8810 has an assigned rate of $.62 and the total payroll for that code is $15,000, the formula would be $15,000 times $.62 divided by 100=$93.00.

Picture Of Hand manual premium With Calculator And Money

Remember, this is only one part of the rating formula. 

Each individual classification code would be calculated using its assigned rate and payroll. From this point, experience modifiers, credits, surcharges or premium discounts would be applied to arrive at a total premium due.

The manual premium is not the final quoted premium.  In fact, the number can vary greatly as there are at least a dozen variables applied to arrive at the policy premium bill and the premium audit bill.

Do not ignore the manual premium figure.  The classification codes, payroll, and assigned manual rate create the basis for your eventual total billing.   Your complete policy will be inaccurately charged if, for instance, the classification codes are wrong.

Check the payroll for each corresponding classification code to make sure it matches your accounting figure.  If not, address those with your agent immediately to make sure your manual premium is accurate.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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