What factor can cause two different companies with the same wage rolls to pay different premiums for employers' liability insurance?

The type of business is a significant factor that can lead to differing premiums for employers' liability insurance, even when two companies have the same wage rolls. Different industries carry varying levels of risk associated with employee injuries and illnesses, which insurers assess when determining premiums. For instance, a manufacturing company may have a higher likelihood of workplace accidents compared to a consulting firm, leading to increased premiums for the former due to the perceived higher risk.

Insurance companies utilize classifications that account for the nature of the business activities being conducted. These classifications help assess the frequency and severity of potential claims arising from specific industries, ultimately guiding the underwriting process. Consequently, companies within riskier sectors face higher premiums compared to those in less hazardous industries, even if they share similar wage expenses.

While other factors like geographical location, no claims discounts, or the number of directors can influence insurance costs, they are not as fundamentally tied to the inherent risks associated with the type of business as the nature of the industry itself. Different industries inherently present varying risk profiles, which insurers evaluate to decide the premium rates accordingly.