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Premium Calculation - Workmen Compensation (WC)

Pricing Methods

Method 1: Simplified Pricing (Current Business Practice)

For standard WC policies:

Estimated Annual Wages Premium (incl. VAT)
Below AED 250,000 Minimum AED 525
Above AED 250,000 Underwriter referral required

Application: - Quick pricing for small businesses - Minimum premium covers basic wage rolls - Above threshold requires detailed risk assessment

Above Threshold Requirements: - Detailed employee breakdown by category - Industry classification review - Safety procedures assessment - Claims history verification

Method 2: Detailed Rating Method

Based on 2,521 policies from Premia UAT database.

Product 5030 - Workmen Compensation

Metric Value
Minimum Rate 0.0044% (0.44 per 1000)
Maximum Rate 139.93%
Average Rate 0.93%
Median Rate 0.46%
Sample Size 2,521 policies

Rate Distribution Insights

The premium rate shows significant variation (0.0044% to 139.93%), indicating:

  1. Risk-Based Rating
  2. Different rates for different industry categories
  3. Hazardous occupations have higher rates

  4. Office/administrative work has lower rates

  5. Wage-Based Calculation

  6. Premium = Total Annual Wages × Rate
  7. Rate varies by employee category

  8. Higher risk jobs = higher rates

  9. Wide Range Factors

  10. Industry type (construction vs office)
  11. Employee categories and roles
  12. Claims history and experience rating
  13. Number of employees

Typical Rate Structure

Based on actual data analysis:

  • Low Risk (0.0044% - 0.20%): Office workers, administrative
  • Medium Risk (0.20% - 1.0%): Light manufacturing, retail
  • High Risk (1.0% - 5.0%): Construction, heavy industry
  • Very High Risk (5.0%+): Specialized hazardous work

Premium Calculation Formula

Base Premium = Annual Wage Roll × Occupational Rate

Final Premium = Base Premium + Loadings - Discounts

Where:
- Annual Wage Roll = Total annual wages for all employees
- Occupational Rate = Rate based on industry/occupation class
- Loadings = Risk-based additions
- Discounts = Volume, claims-free, or negotiated discounts

Actual Premium Examples

From recent policies:

Sum Insured (Wages) Premium Effective Rate Analysis
AED 15,600 AED 571 3.66% High risk category
AED 480,000 AED 668 0.14% Low risk category
AED 48,000 AED 600 1.25% Medium risk
AED 90,000 AED 600 0.67% Medium-low risk
AED 72,000 AED 571 0.79% Medium risk

Rating Factors

  1. Industry Classification
  2. Construction: Higher rates
  3. Manufacturing: Medium rates
  4. Services: Lower rates

  5. Office: Lowest rates

  6. Employee Categories

  7. Skilled workers
  8. Unskilled workers
  9. Administrative staff

  10. Management

  11. Experience Modifiers

  12. Claims history
  13. Safety record
  14. Years in business

Commission Impact

  • General Discount (1001): Applied to 1,617 policies
  • Fixed Discount (1002): Applied to 1,617 policies
  • Loading (2001): Applied to 1,617 policies

PL/SQL Package References

Premium calculation likely handled by: - PGIPK_CALC_PREMIUM_* packages - AIGPK_VAL_* validation packages - Product-specific rating tables

Database Fields

Premium stored in: - PGIT_POLICY.POL_FC_PREM - Premium amount - PGIT_POL_RISK_ADDL_INFO.PRAI_SI_FC - Sum insured (wage roll) - Coverage-specific premium in PGIT_POL_RISK_COVER

Data Source: Analysis of 2,521 actual policies from Premia UAT database. Rates and calculations based on real data.

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