A year after recommending a major cut in Rhode Island’s workers’ compensation rates, a national advisory group has submitted a new proposal to the R.I. Department of Business Regulation that would cut rates by another 2.3 percent, on average, effective Jan. 1.
The DBR has scheduled a hearing for Nov. 16. The attorney general’s office, which acts as a consumer advocate in these matters, has not taken a position on the plan yet.
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A nonprofit supported by the insurance industry, the National Council on Compensation Insurance keeps the nation’s largest database of workers’ comp claim information, which it uses, along with other materials, to recommend insurance rates.
The NCCI submits advisory “loss cost” figures – the anticipated cost of claims for each occupational category – as well as projected loss adjustment expenses, state by state, and then carriers in each state choose whether to adopt those recommendations.
In Rhode Island, workers’ comp rates are based on the loss costs, a “multiplier” to account for each carrier’s administrative expenses, and special discount schedules approved by the DBR. Until this year, carriers had used NCCI’s guidelines from 1998, having no updated data.
Last September, the NCCI filed proposed loss costs for Rhode Island that would’ve reduced rates by an average of 18.3 percent. After lengthy hearings and some legal wrangling, the DBR approved the filing, but with changes that boosted the average rate cut to 20.2 percent.
Broken down by job classification, the new advisory loss costs were as much as 50.3 percent lower for some employers, and as much as 11.9 percent higher for some.
In its new filing, the NCCI is recommending an overall 2.3-percent rate decrease that reflects a 2.5-percent decrease in losses, a 0.1-percent increase in benefits, and a 0.1-percent increase in loss adjustment expenses.
Broken down by category, the proposed changes would range from a 30.5-percent cut for some contracting jobs, to a 27-percent hike for some “goods and services” jobs. In general, contractors would see the biggest savings, 5.5 percent overall, while goods and services would see an overall increase of 2 percent.
The figures are based on policy years 2001, 2002 and 2003, including losses as of last Dec. 31. They include data for all the carriers, including Beacon Mutual Insurance Co., though Beacon is not a member of NCCI and has declined to adopt the 2005 loss costs.
Beacon controlled 73 percent of the Rhode Island market last year, according to the NCCI.
American International Group (AIG) wrote 5.7 percent of premiums, The Hartford 4.2 percent, St. Paul/Travelers 3.2 percent, and Liberty Mutual 2.8 percent.
