Once debt-ridden SIIS plans largest rate reduction

Monday, Jan. 5, 1998 | 10:39 a.m.

CARSON CITY -- Come April, Nevada's service industry, which includes hotels and casinos, will enjoy the biggest premium reduction in the history of the State Industrial Insurance System.

SIIS, which was near bankruptcy in 1992, filed an application to lower rates by an average 22 percent to nearly 47,000 employers enrolled in the system. It will mean a $90 million reduction in premiums.

SIIS and Gov. Bob Miller announced the lower rates on Dec. 18, but no details were released.

"We've operated profitably for four years, which now permits us to reduce rates," SIIS General Manager Douglas Dirks said.

Employers fall into nine categories. For instance, the service-amusement industry will get an average 29.2 percent cut. The last time the rates were lowered, these employers didn't see any reduction. Instead, they were hit with a raise in premiums.

"They did better this time," Dirks said, referring to improved safety records on the job.

Rates will remain the same for electric light and power companies, dental or clinical laboratories and county government. No rates will be increased.

In 1996, rates decreased 2 percent overall, but some industries saw a 26-percent jump while others saw a 25-percent reduction.

Rates for those in the clerical industry will fall an average 29 percent, followed by manufacturing at 25.9 percent. Agriculture rates will decrease by 25.4 percent, retail-wholesale by 21.5 percent, and construction by 20.6 percent.

Dirks said premiums for the average mining company will be 16.2 percent lower, for transportation companies 14.9 percent lower and for government 10 percent lower.

He said losses, particularly for state government, have been higher, meaning a smaller money reduction.

This is the biggest rate reduction since SIIS was created in 1982. Dirks said there was a major increase one year, which was to cover increased pensions, but the rates were lowered the next year by a similar amount.

SIIS collects premiums from employers to pay for the medical and rehabilitation costs of workers injured on the job. About 450,000 employees are covered by this system.

Within the categories, wire goods manufacturers will enjoy a 41.5 percent decrease, the biggest drop of any business group. There will be a 32 percent drop in premiums for television stations.

On the other end, there won't be any decrease for volunteer groups. Dirks said the volunteer groups pay a low premium. Yet when they have claims, the medical costs outstrip what has been paid into the system.

The application was filed with state Insurance Commissioner Alice Molasky-Aram, who must give her approval first. But Miller, in making the announcement last month, indicated that would be a mere formality.

SIIS teetered on bankruptcy in 1992 when it registered a $2.2 billion unfunded liability on its long-term obligations to workers injured on the job. That has been reduced to $850 million and the SIIS has the resources to meet those bills in the future.

The 1993 and 1995 Legislatures, at the request of Miller, made drastic changes in the system. Benefits were lowered, employers were required to join managed-care organizations and deductibles were imposed on businesses when their workers were injured.

In July 1999, private insurance carries will be allowed to compete with SIIS for industrial insurance coverage. Miller and Dirks say the system will be able to withstand the competition.