Businesses in line for insurance break
Many Connecticut businesses are in line for major savings on what they pay annually for workers compensation insurance — a required cost of doing business — with carriers requesting state approval to cut a key rate calculation 16.8 percent next year on average.
The proposed rate schedule by the National Council on Compensation Insurance is subject to approval of the state Insurance Department, with NCCI representing workers compensation insurance underwriters.
It would mark a fifth straight year of declining workers compensation rates in Connecticut, with carriers getting approval last year for a 14 percent reduction in voluntary loss costs that capture the expenses carriers pay out in the form of claims for medical care and wage stipends, calculated under Connecticut law at 75 percent of regular pay. The voluntary loss cost formula excludes overhead costs and profit targets, and any offsetting investment income.
This year, underwriters are asking for even larger cuts in an insurance pool maintained for businesses that represent increased risk for worker injuries, requesting a 19.7 percent reduction on average after receiving approval last year for a 12.6 percent cut.
Under NCCI’s proposed schedule, no Connecticut business would absorb a loss-cost hike of more than 4 percent on the actuarial calculations that feed into their final rates, with some seeing declines of nearly 40 percent and manufacturers and contractors seeing reductions roughly in line with those of office employers.
Carriers saw claims decline six straight years in Connecticut through 2016, with the average indemnity payment not having increased since 2011.
Speaking on a July conference call, the CEO of W.R. Berkley referenced continued pressure by state rating bureaus for workers compensation carriers to cut premiums in response to better results on medical costs. The Greenwich-based company reported continued positive results in 2017 for its lines of workers compensation insurance, with the NCCI not factoring last year’s results into its Connecticut rate request for 2019.
W.R. Berkley ranked 11th last year among workers compensation insurers with about 2.4 percent of the U.S. market as estimated by NCCI, with net premiums totaling $743 million from workers compensation policies in the first half of 2018. Travelers is the market leader with workers compensation premiums of $4.3 billion last year, followed by The Hartford Financial Services Group with $3.4 billion.
“The trends still look very good from our perspective,” said CEO Robert Berkley. “Not across the board — you need to use a finer brush than that — but we still feel pretty good. ... Even though rates are getting more challenging in comp, we’re still finding opportunities to grow.”