Workers Compensation Rate Drop Approved
Workers compensation insurance premiums will drop 6.8 percent on average with the approval of a rate filing Monday by Insurance Commissioner Kevin McCarty.
McCarty's final order approving the request by the National Council on Compensation Insurance, which makes rate filings for the industry, will drop rates for employers for the seventh year in a row dating back to legislative changes made in 2003 that are widely credited with lowering premiums. The decrease will go into effect Jan. 1.
The decision was expected. McCarty had earlier said he agreed in general with the NCCI filing but had some issues with aspects of the method by which the rate increase was reached. NCCI amended its filing, which McCarty said Monday took care of the office's concerns.
NCCI cited two main factors in filing for the decrease: a drop in the frequency of workers comp claims and a continuing decrease in the average claim cost.
The drop also follows uncertainty that arose last year when the Supreme Court threw out a schedule that had limited plaintiffs lawyers fees in workers comp cases. Following that decision, insurers, concerned about higher costs in losing cases, said rates would have to increase for the first time since the 2003 changes, and McCarty agreed. A 6.4 percent increase was approved, but lawmakers changed the law to address the court decision – putting the fee cap back in place. The increase was then rolled back in July.
Office of Insurance Regulation officials say that the cumulative decrease in workers compensation insurance premiums since 2003 is now more than 63 percent.
Contractors have seen the biggest percentage drop, according to OIR, seeing a 10.8 percent decrease with the Jan. 1 change and a drop of 65 percent since 2003.