Component of workers’ comp premiums reduced

Michael Conway

Michael Conway

Colorado employers can expect a reduction in a component of the workers’ compensation insurance premiums they’ll pay in 2019.

The Colorado Division of Insurance approved a 16.7 percent decrease in the average statewide loss costs component of premiums.

The cut follows a 12.7 percent decrease for 2018 and will mark a  fifth consecutive year in Colorado without an increase.

“I’m pleased to see us heading into another year with another large decrease in loss cost,” said Michael Conway, interim insurance commissioner at the Colorado Division of Insurance.

“My hope is that this translates into overall lower costs for employers and workers in Colorado, and that savings in this area are invested in human capital,” Conway said.

The loss costs component of workers’ compensation insurance premiums is based on the average cost of lost wages and medical payments to workers who’re injured on the job.

A number of factors affect overall workers’ compensation insurance costs, including the number and duration of claims, severity of injuries, number of required treatments, health care costs and overall costs to cover workers’ compensation claims.

The decrease in the loss costs component is attributed to a number of factors — including the biggest driver, what’s paid out in claims. There’s been a reduction in the number of claims filed — from 26.3 claims per million in 2002 to 18.4 claims per million in 2016.

Even with the reduction in the average loss cost component, individual employers could see increases or decreases in their overall workers’ compensation insurance premiums based on their classification codes or industry groups.

The National Council on Compensation Insurance, a rating and advisory organization, collects information each year on workers’ compensation claims for the insurance industry and publishes loss costs that form the basis for premium determinations. Colorado insurers use the NCCI loss cost as a base.

Each insurer then adds its own expenses to the loss cost to determine the overall rates charged to employers.

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Posted by on Nov 6 2018. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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