WC Rate Analysis

Report Shows Drop in US Median Comp Rate

The latest report from the Oregon Department of Consumer & Business Services offers a clear picture of the good, the bad and the ugly in national workers' comp rates.
By: | October 9, 2014

California tops the list with the most expensive workers’ comp rates in the nation, while North Dakota again comes in last. Those are among the findings of the latest biennial study from the Oregon Department of Consumer & Business Services.

The report ranks the 50 states and Washington, D.C., based on workers’ comp rates in effect as of Jan. 1, 2014. The researchers compared each state’s rates to the national median rate of $1.85 per $100 of payroll, which was a decrease of 2 percent since the 2012 study.

Workers’ comp experts and state regulators often cite the biennial study when considering reforms to state workers’ comp systems. “The Oregon Workers’ Compensation Premium Rate Ranking Summary is a good benchmark for how the states compare to each other,” said Mark Walls, VP of Communications and Strategic Analysis for Safety National.

“While other States in the top 10 were passing reforms to lower costs, California’s reforms increased costs. Not only are they now the highest cost state, they are significantly higher than number two.” — Mark Walls, VP of Communications and Strategic Analysis, Safety National

The latest ranking shows California, which was the 3rd most expensive state in the 2012 study, took over the top spot from Alaska — now number five on the list. Other states in the top 10 and how they compared to their 2012 rankings included the following:

1. California — previously number 3

2. Connecticut — retained the number 2 spot

3. New Jersey — was previously number 7

4. New York — moved from 5th

5. Alaska — had been the most expensive

6. Oklahoma — remained in 6th

7. Illinois — moved down from the 4th spot

8. Vermont — moved up from 14th

9. Delaware — jumped from the 30 spot

10. Louisiana — moved from 15th

“California now being the number one cost state was not a surprise,” Walls said. “While other States in the top 10 were passing reforms to lower costs, California’s reforms increased costs. Not only are they now the highest cost state, they are significantly higher than number two.”

California’s premium rate index of $3.48 represented 188 percent of the study median. The next highest, Connecticut, had a rate index of $2.87 or 155 percent.

“Illinois and Oklahoma are both still in the top 10 in spite of passing reforms that lowered their claims costs,” Walls noted. “That illustrates how high their costs were before those reforms as the lower costs just brought them closer to the median.”

North Dakota was again the least expensive state in the ranking, with an index rate of $0.88 or 47 percent of the median. Indiana, Arkansas and Virginia retained their number 50, 49th and 48th spots, respectively.

“Another surprise to me was Virginia ranking near the bottom in spite of the fact that they do not have a fee schedule and their medical costs are high compared to surrounding states,” Walls said.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected].

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