Comp rates set to continue downward trend in 2018Reprints
Workers compensation insurance rates will again dip in most states in 2018 as claims frequency declines and workplace safety continues to improve, two trends experts are crediting for the double-digit rate decreases proposed and enacted over the past several weeks.
“It’s nothing new this year; it’s a continuation of what we are seeing,” said Jeff Eddinger, Boca Raton, Florida-based senior division executive for the National Council on Compensation Insurance. “Last year of the 38 states where NCCI makes the filings, 36 of them were for decreases (and) a lot of them, double digits.”
Mr. Eddinger provided Business Insurance with data for 2018 rate filings showing decreases proposed in 36 states; with modest increases of 1.1% and 2.5% filed in Virginia and South Carolina, respectively. Of those with a decrease, 13 states show rate-decrease filings of between 10% and 16.3%. Last year, nine states saw double-digit decreases, Mr. Eddinger said.
So far, 23 of NCCI’s filings have been approved as of early October, a chart shows.
“This trend is continuing with, almost exclusively, decreases,” he said.
The reduction in claims frequency can be attributed to “workplace safety programs paying off,” Mr. Eddinger said. “Companies like to make money and one way you save money is fewer workers comp claims. Outside of the human perspective (of not getting injured), you save money by making the workplace safer.”
Trey Gillespie, Austin, Texas-based assistant vice president of workers compensation with the Property Casualty Insurers Association of America, said the decline in claims frequency has been steady and that other factors have also contributed to a trend he expects will continue.
“When you couple the claims frequency still going down and you have much more stable medical costs and very stable indemnity costs, then you are going to keep seeing a progressive reduction in loss cost and rates,” he said.
“Safety has also been a big factor in the decline in frequency and that is due to obviously safety programs at the workplace and automation that has eliminated hazardous jobs,” he said. “There’s also a big shift in hazardous jobs to more service jobs.”
Mr. Eddinger also pointed to this “long-term phenomenon” in the workplace as a factor: “In general, work that Americans do is not as hazardous as it was many years ago.”
Steve Bennett, associate general counsel for the Washington, D.C.-based American Insurance Association, said access to better medical care is also a factor.
“Thanks to a number of effective reforms, especially those that help control medical costs, the workers compensation industry is quite healthy,” he said in a statement. “AIA’s number one goal continues to be that the injured worker receives the highest quality and most appropriate medical care to foster prompt recovery and a timely return to work.”
Donna Glenn, Boston-based senior vice president for casualty product management for Liberty Mutual Insurance Co., said much of what is working in one state often spreads to others, which is helping to contribute to lower medical costs and more effective treatments everywhere.
“The states are looking at each other for a successful model in controlling medical costs to the best of our abilities,” she said. “Over time, the medical fee schedules have been smartly designed to manage that care. There is also a heightened awareness on pharmaceutical drug component. That does factor into our lowered medical costs.”