As with other types of insurance, the private companies that offer workers' compensation coverage use complex formulas to arrive at the rates they charge companies for policies. However, unlike many other types of insurance coverage, states often play a role in setting the guidelines for workers' compensation rates and helping to determine when a rate increase is fair and necessary. The primary factor that is taken into consideration when it comes to workers' compensation insurance rates is risk, and risk is calculated using a number of common methods. Most states have undertaken occupational risk assessments and assign businesses to one of the predefined risk categories based on the types of operations and activities in which they are engaged. In addition, the frequency and type of injuries and illnesses that are commonly reported by employees in the field are also important considerations in the risk assessment process. Finally, the overall risk assessment is calculated using specific information about each company, such as its number of employees and annual payroll. This final figure is used to determine the company's workers' compensation rate.