Terms & Concepts:

Expense Constant

An expense constant is a flat fee that is included on all workers compensation policies to help cover the insurance company's cost of processing, state reporting, auditing, and other administration and compliance expenses.

In some states the amount charged for the expense constant can vary from one insurance company to another, while in some the state will set specific amounts that must be adopted by all insurance carriers that wish to offer coverage in their territory. Either way, the cost can not be affected by premium discounts, experience modification factors (MODs), and any other proportional adjustments to the premium. The expense constant can only be charged once per policy term and it remain constant regardless of the estimated or final audited premium size.