Workers’ Comp Costs Drop in 2005
Governor Still Supports 32.9% Rate Hike
The 2005 Loss Ratio for workers’ compensation dropped dramatically from the previous years according to data provided by the S.C. Department of Insurance. The Loss Ratio financial data shows the percentage of premiums that are paid by insurance carriers for workers’ compensation claims.
The Loss Ratio in 2005, excluding loss adjustment expenses (LAE), was 73.21% compared to approximately 81% in 2004 and 84% in 2003. This means that workers’ compensation carriers paid out about 73 cents of every premium dollar for claims last year compared to over 80 cents in previous years.
“This data supports our contention that there is no need for the 32.9% workers’ comp rate increase requested by the insurance industry,” said Frank Knapp, Jr., president of The SC Small Business Chamber of Commerce.
Last month the Small Business Chamber and the state’s Consumer Advocate fought against the 32.9% rate increase proposal in front of an administrative law judge. Supporting the rate increase in court was Governor Mark Sanford’s Department of Insurance, the National Council of Compensation Insurance and Companion Property & Casualty. Judge Marvin F. Kittrell is expected to make a ruling on the rate increase in late June or early July.
“This substantial improvement in the Loss Ratio is due to the double digit workers’ comp rate increases in 2003 and 2004 plus very favorable trends showing lost-time claim frequency steadily decreasing,” said Knapp.
The Small Business Chamber has asked Governor Sanford to instruct his Department of Insurance to change its position on a workers’ comp rate increase. “The Department of Insurance has until June 8th to give a proposed order to Judge Kittrell. Based on this new information, the Department should tell the Judge that it now supports only a 12.7% workers’ comp rate increase instead of a 32.9% rate increase,” said Knapp. The Consumer Advocate and the Small Business Chamber both have supported the lower rate increase.
In a message issued Monday, Governor Sanford’s Office refused to change it’s position and is still supporting the 32.9% workers’ compensation loss cost rate increase.
(LAE stands for “loss adjustment expense” and includes expenses directly related to claim payments such as attorney fees, expert testimony, adjuster’s salaries, etc.)