How Connecticut Calculates Workers' Compensation Premiums
Connecticut's workers' compensation system bases premiums on a combination of the employer's payroll, the industry classification of each job (known as class codes), and the insurer's experience rating. The state assigns a basic rate per $100 of payroll for each class; insurers then adjust that rate using the employer's experience modification factor (eXmod), which reflects the company's claim history relative to the average in its industry.
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Typical Class Code Rates for Common Industries
Below are the standard base rates (per $100 of payroll) for several frequently encountered class codes in Connecticut. These rates are set by the Department of Labor and are updated annually.
| Class Code | Industry | Base Rate (per $100 payroll) |
|---|---|---|
| 8810 | Office Employees | $0.45 |
| 8742 | Construction – General | $2.85 |
| 8743 | Construction – Specialty | $3.30 |
| 8748 | Construction – Heavy | $4.10 |
| 8812 | Retail – Sales | $0.70 |
Experience Modification (eXmod) Explained
The eXmod is a numeric factor that can raise or lower the base premium. An eXmod of 1.00 means the employer's claim experience matches the state average. Values below 1.00 indicate fewer or less severe claims, resulting in a discount; values above 1.00 add a surcharge. The factor is calculated by the National Council on Compensation Insurance (NCCI) using claims frequency, severity, and payroll data from the prior three years.
Additional Factors That Influence Your Rate
- Payroll Size: Larger payrolls increase total premiums proportionally, but may qualify for volume discounts from some carriers.
- Safety Programs: Participation in state-approved safety initiatives can earn credits that lower the base rate.
- Policy Limits: Choosing higher benefit limits or broader coverage options adds to the premium.
- Carrier Rating: Different insurers apply their own loading factors, so rates can vary between carriers even with identical base rates and eXmods.
How to Manage Costs Effectively
Employers looking to control workers' compensation expenses should focus on three practical steps: improve safety, monitor claims, and shop around for competitive carriers. Conduct regular safety audits, train workers on hazard recognition, and promptly investigate any incidents. Reducing the frequency and severity of claims directly improves the eXmod, which can translate into noticeable premium reductions. Finally, request quotes from multiple insurers and compare not only price but also the services offered, such as claims handling support and loss control resources.
What to Expect in 2024
For 2024, Connecticut has projected modest increases in base rates across most class codes, reflecting rising medical costs and inflation. Employers should anticipate a 2‑3% overall premium rise, though those with strong safety records and low eXmods may see smaller adjustments. Staying proactive on safety and regularly reviewing policy terms will help mitigate the impact of these statutory changes.