Workers’ compensation carriers in Rhode Island have a new guide to how much they should be charging subscribers, and it calls for an average 20.2-percent rate cut – but as much as a 50.3-percent cut for some employers, and hikes of up to 11.9 percent for a few.
Most workers’ comp insurers base their rates on guidelines supplied by an independent trade group, the National Council on Compensation Insurance, which analyzes the loss history and trends in each market and suggests how much carriers should charge each type of employer to ensure they’ll be able to cover the loss costs.
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In September, the NCCI had filed proposed loss costs for Rhode Island that would reduce rates by an average of 18.3 percent. After some legal wrangling, actuarial reviews, and lengthy hearings, the state Department of Business Regulation on Thursday approved the filing, but with small changes that boosted the size of the average rate cut.
“We are very pleased with the result,” said Stephen Lichatin, a lawyer for the NCCI in Providence. “It is a victory for the policyholders.”
The new guidelines are effective Jan. 1. Individual carriers now have to decide whether or not to adopt them, and if they do, they must file accompanying proposals to the DBR showing how they would adjust those rates to reflect their own needs.
Carriers can charge extra to cover administrative expenses, taxes, etc., or they can provide an across-the-board credit – as many have been doing in recent years – because they can make a profit with even lower rates. They can also provide so-called “schedule credits,” which are given for specific reasons, such as a good loss history, or having signed up for workplace safety program.
The state’s biggest workers’ comp carrier, The Beacon Mutual Insurance Company, which as of June 2003 had 76 percent of the market, initially opposed the NCCI filing, and it’s unclear whether it will now adopt the guide. A company spokesman couldn’t be reached Friday.
