Premium Discount Program

Premium Discounts are not mandatory in Indiana and not available in the Assigned Risk Market.

Premium Discount is optional for a carrier to apply to each insured in Indiana and mandatory in most other states. Reference Basic Manual, Appendix A, Rule BM‐PREP‐SF38B, which contains the State Reference Chart Premium Discount Tables. 

Premium Discount does not apply to assigned risk business.

The program tailors manual premium to reflect equitable expense provisions by size of policy. The premium discounts for Type A carriers (formerly the stock carrier column) differ from Type B carriers (formerly the non-stock carrier column) only in the selection of production expense provisions. A carrier would select to use Type A or Type B discounts, based on its incurred production expense schedule, rather than how they are capitalized.

The table uses “production expense provisions” in lieu of the traditional stock and non-stock choices for columns A & B. Production expense provisions include commissions and other acquisition expenses reported in the carrier’s NAIC annual statement. Other acquisition expenses include: maintenance of branch offices, writing of policies, billing and collection of premiums, auditing records of delinquent agents, and service to agents.The “production expense provisions” item varies on the type of production system.

Premium Discount Endorsement WC 00 04 06 A

This endorsement is flexible, so the look can be different from what you see in the Policy Forms Manual. Since premium Discount tables in Indiana are advisory. If a carrier wants to use it’s own premium discount table it must be filed with and approved by the Indiana Department of Insurance. For ideas on customization refer to this endorsement in the Policy Forms Manual. [WC 00 04 06 A.PDF]

Premium Discount Combination of Policies

Basic Manual Rule BM‐PREC‐R3DE2. states 

​For the purpose of calculating premium discount for two or more policies that are issued to the same insured by one or more carriers that are under the same management, the total standard premium for those policies must be combined. This applies unless the insured instructs the carrier otherwise.

If the policies being combined have different expiration dates:

  • (1) The carrier must determine the policy effective date for application of the premium discount
  • (2) All policies in effect before the established effective date must be cancelled and rewritten as of the established effective date
  • (3) All policies written to be effective after the established effective date of the combination of policies must be written to expire on the same date as the other policies in the combination​​

Additional Resources