The amount of insurance premium may vary, depending on the insurance company. Pricing is based on free competition. Each insurance company has a calculation base for its insurance premium (premium principles). They indicate how the insurance premiums are determined and applied. The premium principles are approved by the insurance company’s board of directors. The company must apply them uniformly to all policyholders. The premium principles are not public.
The Workers’ Compensation Act specifies principles which insurance companies must follow when setting insurance premiums. The principles are:
- correlation between risks and costs
- reasonableness and coverage principle
- equal treatment of policyholders
- promotion of safety at work.
The policyholder must provide the insurance company with the information it needs in order to determine the amount of insurance premium. The information must be provided at the time of taking out the insurance and annually by the end of January. Information reported by the policyholder to the Incomes Register need not be reported again to the insurance company. Insurance companies retrieve the required salary data from the Incomes Register. 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 authorities such as the Tax Administration in order to ensure that its customers have complied with the disclosure requirement.
Insurance based on special-rate and tariff premiums
An insurance policy that takes into account compensation paid for past accidents at work when determining the insurance premium is referred to as a special-rate premium policy. The condition for taking out a policy with a special-rate premium is that the amount of work commissioned by the employer is sufficiently large. In other cases, the policyholder’s insurance premium is based on the risk classification applied by the insurance company (policy with a tariff premium). In determining the insurance premium of a policy with a tariff premium, the insurance company must take into account 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 factors that are based on the coverage for occupational accident and disease risk and treatment expenses. These factors are company-specific. The insurance 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 compensation. 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 the Workers’ Compensation Center, which then credits it to the Finnish Work Environment Fund. The labour protection payment is used to promote labour protection.