OSI approves decrease in voluntary workers' compensation loss costs

The Office of Superintendent of Insurance has recently approved a rate proposal submitted by the National Council on Compensation Insurance that will reduce voluntary workers' compensation loss costs by an average of 10.7 percent, to become effective for policies renewing on or after Jan. 1. This marks the eighth consecutive year in which OSI approves a loss cost decrease for workers' compensation, according to a news release.

The continuous improvement in loss costs is a result of a long-term negative trend in claims frequency, along with a flat indemnity severity and a decreasing medical severity, the release stated. The COVID-19 claims volume in New Mexico has been small and has not significantly affected loss costs.

NCCI is a licensed statistical and rate advisory organization that gathers and analyzes workers' compensation industry losses and trends to provide loss cost recommendations for many states, including New Mexico, according to the release. NCCI loss costs are used by insurance carriers to set workers' compensation rates. They comprise the portion of the total rate that is used to pay the claims and claims adjustment expenses of the injured workers covered by workers' compensation insurance.

The approved loss cost decrease is an average, and insurers are not obligated to adopt the recommended loss costs, so an individual employer's change in premium may vary, the release stated.