Injury claims hiking firms’ costs

Chris Jones

Tuesday, April 2, 2002 | 10:35 a.m.

Nevada's workers' compensation insurance advisor has issued a recommendation that could lead to increases in insurance premiums paid by Nevada businesses.

The National Council on Compensation Insurance Inc. on Friday called for a 1.5 percent increase in "loss cost rates," which are premiums insurers should collect to cover future worker-injury claims. Such costs are combined with administrative and other expenses and market forces to form the final rates insurers charge their policyholders.

The proposed increase will be considered by the Nevada Division of Insurance during an April 10 hearing.

Janice Moskowitz, lead actuary for the Nevada Division of Insurance, said Friday that loss cost rates are only one component used to determine workers' compensation rates. Because employers can still file for rate changes based upon differences in their own expenses from this year to last, she said the cost of premiums could rise by more than NCCI's recommended 1.5 percent.

"The actual rates employers get charged really could go up, despite the fact this (loss cost recommendation) hardly went up at all," Moskowitz said.

Like most lines of insurance, workers' compensation coverage has increasingly become more expensive -- and sometimes more difficult to obtain -- as the industry recovers from heavy losses suffered in the aftermath of Sept. 11.

Reinsurers, or companies that share the risks of other insurers for a portion of their collected premiums, have worked to reduce their exposure to damages from another large-scale event like Sept. 11 and will likely pass on the cost of their additional expenses to policyholders. Such increases could drive up the price of workers' compensation insurance by as much as 30 to 50 percent this year, according to a January report from insurance industry analysts Standard & Poor's.

Even white-collar businesses -- where the likelihood of workplace injuries traditionally prompted lower premiums than those paid by operators of construction sites or factories, for example -- should expect to pay significantly more for workers' compensation coverage this year, S&P said.

"For those (companies) with high concentrations of employees in one location, premium-rate increases of 50 percent are common," said Don Watson, director of Standard & Poor's Financial Services Ratings in New York.

Douglas Dirks, president and cheif exexutive officer of Nevada's largest workers' compensation provider, Employers Insurance Company of Nevada, said last month he also expects rates in the state to increase by an unspecified amount as existing policies expire.

If the state approves NCCI's findings, insurers could use the updated numbers as a base to calculate the rates they charge their new policyholders effective July 1, said Maggie Karpuk, an NCCI state relations executive who serves as the company's liaison to Nevada. Renewal business would be subject to the new loss cost rates as current policies expire.

Karpuk said the Boca Raton, Fla.-based NCCI began collecting state-specific financial information last April from the more than 200 workers compensation insurers that operate in Nevada. That information was updated through late March, when the company made its final analysis and passed on its findings to the insurance division.