After rocketing up the ranks of the states where workers”™ compensation insurance costs the most, Connecticut”™s rates could climb higher in 2012.
The National Council on Compensation Insurance Inc. (NCCI), which represents workers”™ compensation carriers, petitioned to hike a key formula used to determine rates by 4.5 percent next year in Connecticut on average for standard policies; and 2.9 percent on rates assigned for employers in a high-risk pool that are unable to get coverage through regular channels.
Under Connecticut”™s workers”™ compensation laws, employees receive 75 percent of their after-tax wages while recovering from a work injury.
Connecticut employers spent $606 million on workers”™ compensation premiums in 2010, 606, according to NCCI, up 2.7 percent from 2009 but otherwise the lowest amount since 2002.
Still, the state leapfrogged over several Northeast neighbors to claim the sixth slot in a biennial survey of workers”™ compensation premium rates, published by the Oregon Department of Consumer and Business Services. Connecticut finished just ahead of New Jersey, Maine and Rhode Island on the survey, while New York ranked 13th.
In the Northeast, increases are not etched in stone despite overall upward trends in several key areas ”“ Maine companies are set to see an average 3.2 percent drop in overall rates next year, and Vermont likewise reined in rates in 2010.
The Connecticut request comes as new data showed the first increase in at least seven years for workers”™ compensation claims covering lost time following a workplace injury. That occurred despite a higher rate of unemployment, particularly in a few hazardous sectors like construction ”“ and as the Connecticut Workers”™ Compensation Commission reporting a 1.2 percent drop in workplace injuries and illnesses recorded in its databases for the fiscal year ending in June 2010, to just over 64,100 for the 12-month period.
And despite ongoing inflation for health insurance, which carriers blame on higher medical costs, the average medical costs covered by workers”™ compensation in Connecticut dropped a second straight year, though still remain well above their levels from the first half of the last decade.
Of the four major industries detailed by NCCI, manufacturers would see the biggest increase on average at 6 percent in the loss-cost column, followed by contractors at 5.3 percent. Carriers would hike the formula 3.4 percent on goods and services companies and 3 percent on office workplaces.
Carriers would be allowed to apply increases between 23 percent and 26 percent for specific policyholders, as well as for a catchall miscellaneous category that would see an average 6.2 percent rise in its loss-cost formula.
That formula is driven by claims history, mostly from between 2008 and 2010, as well as medical costs, indemnity payments and other expenses.
Another way to look at the Oregon study is to see how Connecticut compares to the middle (median) state. By that measure it has remained the same in the 2008 and 2010 studies, with rates at 25% above the median. That’s a less dramatic story.
Workers comp premium costs are a major issue. Due to increased premiums, we see more policies with low limits ($100k), which can be a problem for large claims. It is so important for companies to ‘get smart’ about comp rates – and even hire consultants when necessary.