The pricing of insurances is subject to free competition and the insurance premiums are company-specific. Each insurance company must have a calculation base for the insurance premiums (premium principles) which indicates how the insurance premiums are determined and applied. The insurance company’s Board of Directors approves the premium principles, and they must be applied uniformly to all policyholders. The premium principles are not public.
The principles which the insurance company must comply with when setting the insurance premiums are given in the Workers’ Compensation Act. The key principles are the correlation between risks and costs, the reasonableness and coverage principle, equal treatment of policyholders and the promotion of safety at work.
The policyholder must provide the insurance company with the information it asks for in determining the insurance premium. When taking out a policy, the policyholder must provide the information annually by the end of January. If the information is materially changed during the policy period, the insurance company must be informed within 30 days of the change.
The insurance company is entitled to receive information from the authorities, such as the Tax Administration, in order to ensure that its policyholders have complied with the disclosure requirement.
Policyholders with special-rate and tariff premiums
If the amount of work commissioned by a policyholder is sufficiently large, compensations paid for the accidents that have occurred in this work can be taken into account in determining the insurance premium (policyholders with special-rate premiums). In other cases, the policyholder’s insurance premium is based on the risk classification applied by the insurance company (policyholder with tariff premiums). These can also be respectively called experience-rated and tariff-rated premiums.
In determining the insurance premium of a policyholder with tariff premiums, the insurance company must consider the employer’s documented preventive actions related to occupational safety, in accordance with the insurer’s premium principles.
Structure of insurance premiums
The insurance premium includes parts that are based on the coverage for occupational accident and disease risk and treatment expenses. These parts are company-specific. The premium also includes statutory supplements.
Of these, the pay-as-you-go payment is used to cover costs such as the annual index-linked increase to compensations. In addition, the insurance company pays the labour protection payment (1.75 per cent of the premium of the compulsory insurance), included in the premium, to TVK which then credits it to the Finnish Work Environment Fund. The labour protection payment is used to promote labour protection.