Workers’ Comp Premiums May Drop

July 22--CHARLESTON, W.Va.--A key ingredient used to determine workers' compensation insurance premiums is on track to decrease 8.1 percent in November -- a reduction that would save the state's 36,000 employers a total of more than $25 million.

Workers' compensation insurance rates have declined a cumulative total average of 43.7 percent since West Virginia privatized the business on Jan. 1, 2006. If Michael Riley , West Virginia's acting insurance commissioner, approves the most recent recommendation, rates as of Nov. 1 would be 51.8 percent lower overall than they were in 2005, when the state was the sole provider of workers' comp insurance.

The National Council on Compensation Insurance Inc., or NCCI, is the state's rating and statistical agent. The NCCI recommended the reduction in a July 15 letter to Riley.

William Kenny , deputy state insurance commissioner, said the Offices of the Insurance Commission is reviewing the NCCI filing. Riley is expected to issue a ruling by mid-August, he said.

"Obviously we are very pleased as it is a decrease -- especially since nationally, workers' comp rates are starting to go up," Kenny said. "This is a real plus for West Virginia, that's for sure."

The reduction would be in loss cost rates, which is the portion of a premium that reflects actual loss costs. It does not include provisions for a company's expenses or profit.

Not all employers would see an 8.1 percent decrease. There are more than 550 job classifications in West Virginia. Some would go down, some would go up and some would not change.

State law requires employers to carry workers' comp insurance. Employers pay for it.

West Virginia employers who cannot get workers' comp insurance from any of the carriers who offer it can buy it through the Assigned Risk Pool. It is the insurer of last resort. Rates in the pool are usually much higher than the rates employers pay when they buy insurance in the competitive market. (This is where volunteer fire departments are landing when their current policy with BrickStreet Mutual Insurance Co. expires).

NCCI has proposed that the loss cost rate for the pool be lowered by 11.9 percent on Nov. 1.

More than 200 insurance companies have filed workers' comp insurance rates with the state and almost 180 are writing policies. According to NCCI, insurance companies wrote $374 million in workers' comp insurance premiums in West Virginia last year.

BrickStreet, the company set up by the state to privatize the business, has 60.6 percent of the West Virginia market.

According to NCCI, the other largest providers and their market share: Chartis Insurance, 10.7 percent; Travelers Group, 5.7 percent; Liberty Mutual Insurance Group, 3.6 percent; and Zurich Insurance Group, 3.4 percent.

Greg Burton , BrickStreet's president and chief executive officer, was asked to comment on the lower rates proposed by NCCI. "BrickStreet is in the process of reviewing the proposed rating filing from NCCI and the impact on our book of business," he said. "From an overall standpoint this is continued good news for West Virginia and further proof privatization was the right decision.

"On the claimant side the frequency of claims are down and the overall cost of care continues to be flat or move down," he said. "Both are indications that the workplace is safer than in previous years and the claimant is getting back to work faster and getting the care they need.

"On the employer side -- overall rates continue to decrease and if this reduction is approved the market place has seen an overall reduction of slightly over 50 percent since Dec. 31, 2005."

Contact writer George Hohmann at [email protected] or 304-348-4836.

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