While California, New York and New Jersey continue to be the most expensive states for workers compensation, according to a closely watched biennial study, observers say improved comp insurer performance and lower claim costs have driven down national workers comp premium rates.

The Oregon Department of Consumer and Business Services issues its ranking of workers comp premium rates for 50 states and Washington every other year.

This year’s ranking, published last month, is based on workers comp rates in effect as of Jan. 1, 2016, and shows a national median workers comp premium rate of $1.84 per $100 of payroll for this year. That compares with a national median of $1.85 per $100 of payroll in Oregon’s 2014 study.

Study co-authors Chris Day, senior research analyst for the Oregon Department of Consumer and Business Services, and Mike Manley, the department’s research coordinator, said the study does not monitor market conditions that contribute to changes in state premium rates.

However, Peter Burton, senior division executive of state relations with the Boca Raton, Florida-based National Council on Compensation Insurance Inc., said an improving workers comp market nationwide likely contributed to a small decline in the national median workers comp premium rate.

“In the aggregate, we have seen recent underwriting gains, which have been driven by increased premium volume, lower claim frequency and the modification of the costs associated with medical and indemnity claims,” Mr. Burton said.

The Oregon study reported that California’s 2016 workers comp premium rate was $3.24 per $100 of payroll, making it the most expensive state in the study. New Jersey came in second at a rate of $2.92 per $100 of payroll this year, while New York was in third place with a rate of $2.83 per $100 of payroll.

California, New Jersey and New York were ranked No. 1, No. 3 and No. 4, respectively, in Oregon’s 2014 study.

Dave Bellusci, executive vice president and chief actuary for the California Workers’ Compensation Insurance Rating Bureau, said California has several factors, including costs related to defending and administering workers comp claims, that lend themselves to its top rank in the Oregon study.

“California has a high frequency of permanent disability claims, (and) medical costs tend to be fairly high in California,” Mr. Bellusci said. “And from what we’ve seen, it’s not so much the intensity of medical (costs) early on; it’s that the claims stay open longer and the medical process continues longer.”

Mr. Bellusci noted that California has seen a slight drop in premium rates due to workers comp medical reforms under Senate Bill 863, which he said drove down medical costs in the state.

S.B. 863, which passed in 2012, included such reforms as an independent review process for medical treatment and billing disputes, fee schedules for home health care, language interpretation and other comp-related services, and fees for lien filings.

North Dakota, Indiana and Arkansas were the states with the least expensive workers comp premium rates, keeping their same rankings from 2014, according to the Oregon study. North Dakota had a premium rate of 89 cents per $100 of payroll this year, while Indiana’s rate was $1.05 and Arkansas’ was $1.06.

Pam Ferrandino, former executive vice president and senior principal with the national casualty broking team at Willis Towers Watson P.L.C., said lower-cost states tend to have a mix of industries that aren’t as costly to cover under workers comp.

“Whether it is a mix of who their workforces are or what they are doing well within their comp system, the cost of the system just doesn’t bear the same operational expense as in other states,” she said.

While NCCI has no official stance on the Oregon workers comp ranking, Mr. Burton said states pay close attention to the rankings each year.

“Historically, states like Connecticut and New York, which have been cited as having high premiums, have taken exception,” he said. “These states think the Oregon study is not representative of their (worker) classification environment. And to the contrary, states having low premium rankings believe they have low-cost systems and have a positive environment to attract business to their state.”

While states may hope to land among the less expensive states in the Oregon study, co-author Mr. Manley said states should watch the national median rate rather than their individual rankings to get a fuller picture of the workers comp market.

For states in the middle of the ranking, it “doesn’t take a big change in rates in relation to other states to bounce their rank value around quite a bit,” Mr. Manley said, noting that most state premium rates were within 10% of the national rate.