Some workers’ comp rates to leap

Thursday, April 22, 1999 | 12:02 p.m.

More than 8,500 Nevada employers who now pay the minimum $120 a year rate per employer for workers' compensation must pay at least $210 per year with the advent of competition.

Starting in July, private insurance companies can compete with the Employers Insurance Company of Nevada, formerly the State Industrial Insurance System, in selling workers' compensation coverage to Nevada businesses.

But under a law approved by the Legislature two years ago, rates they may charge are set by the National Council on Compensation Insurance.

This private organization has set the minimum rate at $210 a year.

Barry Lipton, regional actuary for the company, told the Senate Commerce and Labor Committee on Wednesday that minimum rates in Nevada have been too low and that they should increase to $400 to $750 in the next five years.

Neither committee Chairman Randolph Townsend, R-Reno, nor Sen. Ann O'Connell, R-Las Vegas, liked his announcement.

They suggested the Legislature in 2001 repeal the law that puts price controls on what insurance companies can charge for workers' compensation. The deadline has passed this year for introduction of bills that could repeal the price control law.

All insurance companies this year must charge the same rates for workers' compensation. Not until July 2003 does the state law remove all price controls.

Insurance companies, however, may deviate from the set prices by 5 percent in 2000, 10 percent in 2001, and 15 percent in 2002.

Townsend pointed out that it was an Assembly bill that set price controls.

"I didn't like the concept," he said. "We are the deregulation committee. Let the market put downward pressure on prices."

But he also acknowledged that the state's minimum rate for workers' compensation may have been deliberately held low. Larger companies may have paid more to cover costs of the small companies.

Despite their concerns, Insurance Commissioner Alice Molasky and Cliff King, a key member of her staff, said all businesses may gain with competition. More than 230 insurance companies will be selling workers' compensation.

Besides workers' compensation, many of these companies sell other types of insurance. They may offer better deals on other insurance in exchange for a company taking their workers' compensation policies.

Although the National Council on Compensation Insurance will set possible rates for insurance companies throughout the period of price controls, the insurance commissioner retains authority to revise its proposals.

Molasky earlier this year cut the company's recommended rates by 6.6 percent.