Nevada worker comp premiums likely to rise

Thursday, Dec. 16, 1999 | 11:46 a.m.

CARSON CITY -- Despite some protests, state Insurance Commissioner Alice Molasky-Arman is expected approve within the next week a 6.4 percent across-the-board increase in industrial insurance rates for an estimated 44,000 employers in Nevada.

The insurance division held a public hearing Wednesday on the proposed new rates and Chief Insurance Assistant Jim Jeppson said, "We must act immediately," so rates can become effective Jan. 1. The higher premiums are needed to cover increased benefits for injured workers.

The National Council on Compensation Insurance Inc., which is the rate advisor to Molasky-Arman, said the 1999 Legislature enacted the higher benefits as part of the bill to privatize the Employers Insurance Co. of Nevada, which is to take place also on Jan. 1.

Gov. Kenny Guinn in the next few days is expected to proclaim that Employers Insurance Co. is financially able to be converted from a state agency to a private company. And he will name its first board of directors. Those chosen will serve staggered terms and when the terms expire, the policy holders will elect the directors.

At the Wednesday public hearing, Randy Reznicek, an agent who specializes in industrial insurance policies in Las Vegas, and Glen Greener, representing the Nevada Subcontractors Association, argued any rate increase should be delayed.

Reznicek said Nevada's rates already were "artificially high."

Reznicek and Greener said current insurance rates are based on statistics gathered from Employers Insurance Co. These rates, they said, don't take into account the efficiencies of the private companies that have been writing policies since last July 1.

But Gerald Yeung, an actuary for the compensation council, said the rate increase would have been 12 to 18 percent instead of 6.4 percent if it was assumed that Employers Insurance Co., was doing "business as usual." He said the company, which has been a state agency, "has tightened its claims procedures."

Yeung said the Legislature boosted benefits for those with permanent partial disabilities by 11 percent. To cover that cost, rates had to be raised 3.6 percent.

There's a longer duration for the injured worker to receive vocational rehabilitation, which meant a 1.6 percent increase.

Rates needed to go up 0.8 percent to pay for subsequent injuries. Yeung said this occurs when a worker may have suffered an on-the-job injury. If the injury is aggravated by an outside activity, the worker can now collect increased benefits. "More injuries will be eligible under workers compensation," Yeung said.

And the state Division of Industrial Relations needs more money to police industrial insurance and that will require a rate increase of 0.4 percent.

All of those increases total 6.4 percent.