South Carolina: Officials approve decrease in comp loss costs by 9.8 percent
Scott H. Richardson, director of the department, announced the approval of the National Council on Compensation Insurance's filling that called for a 9.8 percent overall rate decrease in workers' comp loss costs.
"This is the second year a decrease has been approved," Richardson said. "We are pleased to see this trend toward an improved economic climate and hope to see this continue into next year."
In 2008, the Assigned Risk Plan -- South Carolina's residual market mechanism -- accounted for approximately 3.9 percent of the direct written premium for workers' comp coverage in the state. Officials said this was a decrease from 7.7 percent in the previous year.
"This decrease indicates that the majority of all workers' compensation insurance coverage is being written through the voluntary market thereby demonstrating a strong marketplace," Richardson said. "There are several reasons for this trend as we have seen an increase in employer safety programs, a decrease in claim frequency and changes in the severity of claims."
Medical services accounted for approximately 42 percent of the total benefit costs incurred in workers' comp system. This is a significant change from two years ago, Richardson said. Indemnity payments now account for the majority of workers' comp costs. Officials noted that the primary reason for this shift was the change in the hospital fee schedule that was implemented in 2006 by the South Carolina Workers' Compensation Commission.
Reforms made impact. In 2007, Gov. Mark Sanford enacted Act No. 111, which made several reforms to the state's workers' comp system. Richardson said the law addressed many of the administrative issues often cited as cost drivers and called for various reforms to the workers' comp in an effort to help stabilize the rates in the market.
Among the reforms was the requirement that insurers file and receive approval of the loss cost multiplier and any modifications to the approved loss costs 30 days prior to using the new rates. The act also required the department to engage the services of a credentialed actuary to review these filings, a practice Richardson said the agency will continue to use when reviewing filings. Additionally, the reforms provided for the elimination of the Second Injury Fund by 2013.
"We believe these reforms will help stabilize the rates in this market," he said. "We will continue to monitor this trend and assess the impact these reforms have on workers' compensation rates in South Carolina as it will take several years to realize the full impact."
Read more at the WorkersComp Forum homepage.
July 19, 2010
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