Missouri Department of Insurance recommends decreasing workers' comp rates

Wednesday, December 30, 2009 | 1:02 p.m. CST; updated 1:16 p.m. CST, Thursday, December 31, 2009

COLUMBIA — As part of its year-end duties, the state Department of Insurance reviews workers' compensation claims paid by employers during that year. The department then recommends rate changes to workers' comp policies.

Because there were fewer workers' comp claims in 2009, the department is recommending that such policies for 2010 be based on an 8.1 percent decrease in loss-costs, which would result in lower rates. Loss-costs reflect the average costs of lost wages and medical payments of workers injured on the job, the department said in a news release this week.

Loss-costs are the largest component of setting workers' comp rates, said John Huff, director of the Missouri Department of Insurance, Financial Institutions and Professional Registration in Jefferson City.

Under Missouri law, insurers and self-insurers may set their rates either based on the department's annual recommendation or based on one made by the National Council on Compensation Insurance. This council, which reviews data from across the country, is recommending lowering rates based on a 1.9 percent decrease.

Huff said that at a minimum, insurers must comply with the national recommendation. However, he hopes companies will follow the recommendation of the department, which tries to help the businesses buying the insurance.

“There is a very competitive market right now, and businesses should shop around to find the best rates,” Huff said.

There are 256 insurance companies providing workers’ compensation policies in Missouri, with 25 new companies since 2008, he said.

“This is a healthy sign of competition in Missouri,” Huff said. “We encourage competition to keep prices down.”

The competitive market is a result of continued improvements in workplace safety, which leads to fewer claims being filed, Travis Ford, communications director, said.

According to the Department of Insurance, the frequency of on-the-job injuries has gone down 60 percent statewide over the past 15 years, Huff said. Because of the downward trend, this is the fourth consecutive year the department has recommended lowering workers' comp rates.

Ford said the 2009 data shows that insurance companies can afford to lower their rates and still be profitable.

The amount of money each business would save under the department's recommendations varies because of different factors, including the number of employees, but the data shows an aggregate total of $80 million in reduced premiums for 2010, Huff said.

He said this decrease would not affect employees because their coverage would still remain the same.

Missouri Employers Mutual, one of Missouri's largest providers of workers’ compensation insurance, had no comment about the new recommendations, Heather Baer, the marketing communications writer and editor, said.

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Allan Sharrock December 31, 2009 | 1:33 p.m.

“This is a healthy sign of competition in Missouri,” Huff said. “We encourage competition to keep prices down.”

If they really want to increase competition then we can't we buy insurance across state lines?

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