Delaware: Court upholds insurance department order aimed at controlling comp rates

A Delaware court recently upheld an order by the Department of Insurance aimed at controlling workers' compensation rates in the state.

Officials said the ruling by the Delaware Court of Chancery will allow the state to fully implement reform legislation that was adopted in 2007.

Former Insurance Commissioner Matt Denn, currently serving as Delaware's lieutenant governor, issued an order late last year to reduce workers' comp rates after determining that employers were being overcharged for coverage. Denn argued that rates in effect at the time failed to properly account for certain cost-containment measures required by the reform legislation, S. 1.

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The Delaware Compensation Rating Bureau, an advisory group that includes executives from the insurance industry, appealed the order. The bureau disputed 6 percent of those figures, representing the cost savings in cases arising prior to the October 2008 enactment of the reform bill. DCRB officials contended that insurers should be permitted to retain the cost savings achieved through the reforms. Denn, however, wanted those savings passed on to policyholders.

Insurance Commissioner Karen Weldin Stewart said that she was pleased with the decision, which will lead to further reduction in workers' comp rates in the coming years. Rates are expected to drop by 6 percent in 2009, 6 percent in 2010, and 5 percent in 2011. Stewart said Denn's order will translate into millions of dollars in savings for Delaware's businesses.

"I am pleased that Delaware's employers will continue to see additional substantial savings of workers' compensation premiums while their employees will enjoy relief relative to medical fee schedules for workers' compensation injuries during these challenging economic times," she said.

Read more at the WORKERSCOMP Forum^TM homepage.

August 31, 2009

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