Colorado employers can expect a reduction in a component of the workers’ compensation insurance premiums they’ll pay in 2020
The Colorado Division of Insurance approved an 8.5 percent decrease in the average statewide loss costs component of premiums.
The cut follows a 16.7 percent decrease for 2019 and will mark a sixth consecutive year in Colorado without an increase.
“Yet another year with a decrease in loss cost for workers’ compensation is another win for Colorado employers,” said Michael Conway, Colorado insurance commissioner. “Large and small companies alike should be able to use this to help their businesses and their employees.”
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.
However, 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 31.6 claims per million dollars in premiums in 2003 to 19.6 claims per million dollars in premiums 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 in 2020 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 workers’ compensation premiums charged to employers.