Decrease proposed for workers’ compensation insurance rate

Monday, Oct. 11, 2004 | 10:48 a.m.

CARSON CITY -- State Insurance Commissioner Alice Molasky-Arman says she will make a decision in about one month on a recommendation to lower by 6.5 percent the average rate paid by businesses for workers' compensation policies.

She said this was the second straight year the National Council on Compensation Insurance has suggested a rate reduction.

But Dick Rottman, owner of a Reno insurance company and former state insurance commissioner, said he couldn't understand how that national group is calling for a rate decrease in industrial insurance rates.

Rottman said there are double-digit increases in medical costs. And the 2003 Legislature changed the permanent partial disability law and in some cases the cost for injured workers has risen 15 percent to 20 percent.

"Everything points to higher costs," Rottman said.

Douglas Dirks, head of Employers Insurance Group that is one of the largest writers of workers' compensation in Nevada, could not be reached for comment.

Nevada businesses can either have their own system where they take care workers injured on the job or contract with an insurance carrier to pay for the medical and rehabilitation costs.

The national council recommended an average decrease of 1.9 percent on the premiums paid for workers in the assigned risk category where companies don't have a good safety record.

Last year Molasky-Arman lowered rates by an average 12.3 percent and 15.6 percent in the assigned risk category, based on the national council's recommendation.

She said in contrast to other states where workers' compensation rates are flat or increased, Nevada businesses are benefiting from falling rates.

Since workers' compensation represents a significant cost to employers, Molasky-Arman said she is optimistic the reduced premiums will encourage more businesses to locate in Nevada.

If Molasky-Arman approves the recommendation, most employers will see lower rates. But she said some companies could face rate increases of up to 20 percent in the voluntary market and as high as 24 percent in the assigned market because of their on-the-job safety records.

The new rates will apply to each employer on its normal anniversary rating date.

The national organization has also proposed a change in the experience rating formula for companies. It would be an increase of 1.8 percent, but that would be offset by the average 6.5 percent decrease in premiums, said Molasky-Arman.

Ray Bacon, executive director of the Nevada Manufacturers Association, said this was good news for employers. He said some of the reforms enacted in 1993, when the system was near bankruptcy, have kicked in.

Bacon noted, however, that businesses with poor accident records will be paying more.

The industrial insurance system was converted from a public system to a private venture following a recommendation of Gov. Kenny Guinn.

Those wanting to submit written comments can send them to the state insurance commission's office at 788 Fairview Drive, Suite 300 in Carson City at 89701-5491 or by e-mail to insinfo@doi.state.nv.us. Comments must be submitted by Nov. 1.