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Premium-rating model for workers’ compensation insurance in construction
journal contribution
posted on 2008-08-01, 00:00 authored by Imriyas KamardeenImriyas Kamardeen, S P Low, A L Teo, S L ChanProviding adequate workers’ compensation insurance WCI is mandatory by legislation in most countries for employers to
hire workers. It is enforced to safeguard the interests of occupational injury victims while eliminating their employers’ financial burden of
compensation. WCI’s significance in construction is immeasurable because the construction industry appears to be recording higher injury
and fatality rates globally. On the other hand, insurance companies must be meticulous in deciding premiums for WCIs for construction
projects. Traditionally, insurers have been adopting the experience modification rating technique for premium-rating of WCI. However,
this technique has been proven ineffective for construction applications due to the unique characteristics of construction projects. Hence,
a new premium-rating model for construction was developed and tested in the Singapore general insurance industry. The proposed model
streamlines structured analyses of project hazards, contractors’ safety management systems, market conditions, and insurers’ internal
factors to decide optimal premiums. Moreover, it infuses the partnering notion in WCI for construction. The implementation of the
proposed model in the insurance industry would facilitate accident control in the construction industry and thereby loss minimization for
insurers.
hire workers. It is enforced to safeguard the interests of occupational injury victims while eliminating their employers’ financial burden of
compensation. WCI’s significance in construction is immeasurable because the construction industry appears to be recording higher injury
and fatality rates globally. On the other hand, insurance companies must be meticulous in deciding premiums for WCIs for construction
projects. Traditionally, insurers have been adopting the experience modification rating technique for premium-rating of WCI. However,
this technique has been proven ineffective for construction applications due to the unique characteristics of construction projects. Hence,
a new premium-rating model for construction was developed and tested in the Singapore general insurance industry. The proposed model
streamlines structured analyses of project hazards, contractors’ safety management systems, market conditions, and insurers’ internal
factors to decide optimal premiums. Moreover, it infuses the partnering notion in WCI for construction. The implementation of the
proposed model in the insurance industry would facilitate accident control in the construction industry and thereby loss minimization for
insurers.