Consent to rate is a term used by insurance companies to charge more premium than typically allowed.
Why?
Well, in workers’ compensation, either the state sets the rates to be charged on workers’ compensation classifications or the insurance company has filed their individual rates that they intend to charge each classification. Insurance companies can only deviate from these rates typically up to 30-40% depending upon the state.
So, let’s say your business has experienced losses on the workers compensation policy. This usually leads to a higher experience mod factor. Perhaps your account has become too risky for insurance companies based on the calculated premium. The risk that the insurance company is going to take on is high. Insurance companies like all businesses, need to make money. In this example the insurance company may decide that in order to insure your business they need to use alternate rates that make sense to adequately cover the exposure. This is what is called consent to rate. You agree to a surcharge on the premium in order to obtain insurance coverage.
What can your company do?
Many states have an outlet for workers’ compensation policies when coverage cannot be found in the standard markets. This outlet is called the assigned risk pool. The rates that are charged in the assigned risk pool vary from state to state and charge higher premiums than the standard market
If your business is being told that you need to agree to consent to rate, it doesn’t mean you do not have options. If you don’t agree, then you will not receive a quote or coverage. It’s best that if your company is in this position that you start shopping around and looking for your best alternative. At the end of the day we want to help and it’s best to consult a workers compensation expert.