A framework for computing workers' compensation insurance premiums in construction

Singapore’s general insurers have been recording detrimental loss ratios in workers’ compensation insurance
business for construction projects. This is due to the ineffectiveness in the risk assessment for premium-rating
and the failure of contractors to provide adequate safety measures with an increased reliance on the workers’
compensation insurance. Based on the findings of an extensive literature review and an interview questionnaire
survey in the general insurance industry of Singapore, a new premium-rating framework is proposed. The
proposed new premium-rating framework facilitates structured assessments of risks in construction projects and
market conditions to derive optimal premiums. It also establishes an effective risk control strategy via a wellstructured incentive system for contractors and clients. The implementation of the framework in the general
insurance industry can facilitate accident control in the construction industry and thereby minimize insurers’
financial risks.