How is the Manual Premium calculated?

The calculation of the Manual Premium involves taking the total payroll amount and applying a classification factor to determine the premiums owed based on the classification of risk associated with the workers' roles.

By dividing the payroll by 100, you convert the payroll amount into a format where the classification factor, which is specific to the type of work being performed, can be effectively applied. This approach captures the relationship between payroll expenses and the inherent risks associated with different job classifications, enabling accurate premium assessment.

This method ensures that the calculated premium reflects both the magnitude of the payroll and the specific risks associated with different job classifications reflected by the classification factor, allowing for a precise and equitable premium structure.

The other options do not accurately represent the calculation necessary for determining the Manual Premium, as they either misalign the payroll and classification factor or perform incorrect mathematical operations, which would not yield a valid premium amount.