Pa. announces rate cut in workers’ compensation insurance premiums

March 30--Gov. Tom Wolf said the cost of doing business in Pennsylvania will be a little cheaper this year.

The state Insurance Department approved a reduction in the annual workers' compensation insurance premium rate, which Wolf said will save employers $150 million. Benefits for injured workers will not be affected.

New rates go into effect Saturday.

The cut follows a trend of reductions, which has "improved our state's standing across the nation for this cost of doing business," Wolf said in a statement Thursday. It "will further help business owners create jobs that pay in Pennsylvania and at the same time, maintain fair benefits for workers injured on the job, something that is vital for families' financial well-being and peace of mind."

Reducing costs for workers' comp premiums is a positive for businesses, said Chad Amond, president of the Westmoreland Chamber of Commerce.

"Those dollars can be infused into operations and back into the community," he said.

The reduction is based on the Pennsylvania Compensation Rating Bureau's annual loss cost filing, which is used to calculate the premium employers pay for workers' comp insurance.

Rates vary widely depending on the type of work. For instance, riskier jobs like roofing have higher rates than low-risk desk jobs. Not all employers will see a reduction, the administration said.

The PCRB estimates an overall average drop of 6.21 percent for the year. Last year's overall average rate decreased by a little less than 1 percent. Total premium cost paid by employers in 2016 was $2.5 billion, according to PCRB.

The PCRB said the reduction is partially due to impacts of a 2014 state law. The law closed a price-adjustment loophole that allowed physicians to dispense repackaged prescription drugs directly to injured workers, inflating workers' compensation costs for employers. The state also is enjoying benefits from a mid-1990s workers' compensation reform package, according to PCRB.

Pennsylvania's premium in 2016 ranked 26th in the nation, according to the state of Oregon, which has tracked workers' comp rates nationally since the mid-1980s.

A 2014 report from the National Foundation for Unemployment Compensation & Workers' Compensation put Pennsylvania's average benefit cost at $545 per covered worker.

Businesses can reduce their workers' compensation rates through safety training, and Pennsylvania incentivizes employers to form a workplace safety committee, which can earn the business a 5-percent reduction in workers' comp insurance costs.

Employers with certified workplace safety committees have saved roughly $604 million in workers' comp premium costs, according to the state Department of Labor & Industry. It says more than 11,220 state-certified workplace safety committees have been established since March 1994.

Kevin Zwick is a Tribune-Review staff writer. Reach him at 724-850-2856 or [email protected].

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