Good news on workers’ compensation insurance

For all the South Carolina businesses required to cover their employees with workers’ compensation insurance, there is some good news.

The National Council on Compensation Insurance (NCCI) filed this past February with the SC Department of Insurance for an overall 4.1% increase in one of the key determinants of workers’ comp premiums—loss costs. Loss costs are a measure of the projected premiums (based on claim trends) needed by insurance companies to pay claims plus administrative costs for the claims.  It does not include profit or other overhead costs.

Since 2005 the South Carolina Small Business Chamber of Commerce has successfully challenged excessive loss cost increases either in front of an Administrative Law Judge, thanks to pro-bono lawyers from the Injured Workers Advocates, or in negotiations.  So we were prepared to also intervene along with the SC Department of Consumer Affairs in the current request if that agency intended to oppose the proposed 4.1% hike.

Now the good news.

With the support of Consumer Affairs, the Department of Insurance negotiated at 39% decrease in the loss cost increase request. A 2.5% increase will start in September and be used to calculate future premiums.

Of course no increase, or even a decrease as there has been in recent years, would have been better. However health care costs, the principle driver of this increase, continue to rise and weren’t offset by a decrease in claim frequency (which has been flat).

Never-the-less, workers’ comp premiums are relatively stable especially compare to the mid-2000s when double digit loss costs rates were filed. The Small Business Chamber has been a key player in this success and will continue to be a vigilant protector of small businesses regarding workers’ comp.

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