Employer responses to workers' compensation insurance experience rating

A study investigates the impact of an insurance premium experience rating mechanism that is designed to induce firms to reduce the incidence of workplace accidents and accident claims costs. Logit model analysis of survey-response data and case study information is used to analyze the impact of the introduction of workers' compensation insurance premium experience rating on employer behavior in Ontario, Canada. The main result is that the financial incentives provided by experience rating have induced employers to alter their behaviors and undertake strategies aimed at accident prevention (reducing accident frequency rates) and reducing workers' compensation claims cost.