Two methods are most common. In certain jurisdictions, the seller is permitted to formulate a price basis and submit it to the regulating authority for approval. This is private pricing with the oversight being provided through individual filings. Another method is for the State to formulate and fix the rate schedule. This procedure is used where the ratemaking and the selling are consolidated in a single unit as in the case of an exclusive state fund.
New Jersey uses a third method, one which is unique.
The cost administration for workers compensation insurance has been delegated by the Legislature to the Compensation Rating and Inspection Bureau , which may be described as quasi-independent, privatized, and an instrumentality of the State under the supervision of the Commissioner of Insurance. The uniqueness of this method is that the State through its own agency is in possession of the detailed data and is in a position to exercise its authority on behalf of the buying public at the time the price schedules are formulated. Further, in accordance with statute, the seller has an opportunity to be heard before the schedule is embodied in a formal recommendation to the Commissioner of Insurance. Through this unique and complete process the dual interests of the buyer and seller of insurance are effectively brought together through the Compensation Rating and Inspection Bureau. Communication is a major factor in the everyday operations of the Rating Bureau.