Employers to see 16% decrease in comp loss costs, officials say
"The drop in loss costs will push many workers' compensation premiums down," said Marcy Morrison, commissioner for the Colorado Division of Insurance. "If every insurer implemented the decrease without other adjustments, the overall savings to Colorado consumers would be as much as $152 million."
Loss costs, which make up a significant component of workers' comp premiums, are the average cost of lost wages and medical payments of workers injured during the course of their employment. Officials said the ultimate savings to consumers will be significant, but smaller than the maximum projection because rate filings will be made by individual insurers before the loss cost reduction goes into effect on Jan. 1, 2009. However, Morrison said many employers will realize a savings in their workers' comp premiums compared to last year.
Morrison said the loss cost reduction is based on a continuing decrease in the number of claims filed in 2007.
"Workers' compensation insurance rates have declined 43.4 percent since 2000," Morrison said. "I'm pleased to announce this is the seventh decrease during the past eight years. This is good news on several fronts. It means that workers are having fewer injuries and fewer claims are being filed, which can be attributed to a safer work environment and the efforts of employers to provide safe working conditions. It also shows that the Colorado market is stable."
The projected loss cost figures for 2009 were presented by the National Council on Compensation Insurance at a hearing in September. NCCI, a rating and advisory organization, collects annual data on workers' comp claims for the insurance industry and publishes loss costs that form the basis for all premium determinations. All insurers in Colorado use the NCCI loss costs as a base. Each insurer's own expenses are added to the NCCI's loss costs to arrive at the rates charged to employers.
Although workers' comp claims are regulated by the Division of Workers' Compensation in the Colorado Department of Labor and Employment, rates for premiums are reviewed and regulated by the Colorado Division of Insurance in the Department of Regulatory Agencies. The NCCI filing, the actuarial reviews, and public comments are used by the NCCI to make a recommendation to insurance carriers for the premium rates for the following year.
November 4, 2008
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