Colorado: Division orders 9.7 percent decrease in WC loss costs for '10
Insurance Commissioner Marcy Morrison said loss costs will drop 9.7 percent beginning Jan. 1, 2010. Loss costs are the average cost of lost wages and medical payments of workers injured during the course of their employment. All insurers in Colorado use the National Council on Compensation Insurance's loss costs as a base. However, each insurer's own expenses are added to the loss costs to arrive at the rates charged to employers. Morrison said employers could see as much as $84 million in reduced premiums if all insurers implemented the revised loss costs with no further adjustments.
According to Morrison, the loss cost reduction is based on a continuing decrease in the number of claims filed in 2008.
"Workers' compensation insurance loss costs have declined more than 50 percent since 2000, and this year's decrease represents the eighth decrease in nine years," she said. "This continuing trend indicates that workplaces are much safer than they have been in the past, and that employees are performing their duties in safer manners. Safety programs introduced by employers and insurance companies over the past several years are improving the Colorado workers' compensation claims data, and that improvement continues to drive loss costs downward."
Gov. Bill Ritter hailed the reduction as extremely good news for businesses across the state.
"In this tough economy, it's vital that state government is a strong and effective partner for Colorado businesses," he said. "Our economy is doing better here than in many other states, and this will only help."
There are more than 200 companies currently licensed to sell workers' comp insurance in Colorado. Pinnacol Assurance -- the state-chartered, but independently run and funded insurance firm -- accounts for nearly 50 percent of the market.
Committee recommendations. Members of an interim legislative committee charged with examining the role and operation of Pinnacol recently held their last meeting. At the series of hearings, required under legislation signed into law in June, lawmakers have looked into accusations that the insurer amassed large reserves, overcompensated its executives and spent lavishly on entertainment, while denying injured employees' claims.
Over the course of the meetings, Sen. Morgan Carroll, D-Aurora, chairperson of the group, argued that Pinnacol was keeping 1,224 percent of risk-based capital -- higher than other state workers' comp funds and higher than other workers' comp carriers in the state. In addition, Carroll said Pinnacol has posted aggressive and record surplus growth, despite dividends issued.
"The extraordinary level of surpluses has raised questions about whether policyholders are being overcharged or whether injured workers are receiving the benefits they should," she said.
At the final meeting in October, the committee voted to move forward with seven pieces of legislation. The bills are expected to be addressed when the state Legislature reconvenes in January. Specifically, the legislation would increase fines for improperly denying comp claims, boost transparency of Pinnacol's operations and management, and give workers plain language notice of their rights under current law. In addition, the legislation would set a limit for Pinnacol's surpluses and require the insurer to refund money to policyholders if the surpluses surpassed that level.
Read more at the WORKERSCOMP ForumTM homepage.
December 7, 2009
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