Workers’ Comp Market Share: Minnesota and Missouri

Minnesota’s workers’ compensation costs relative to payroll have been on the decline since 2002, and many Missouri businesses may see lower workers’ comp insurance costs in 2016, as hundreds of insurers have filed for rate reductions in that state for 2016.

Minnesota: A No-Fault System

Workers’ compensation is a no-fault system in Minnesota: the employee does not need to prove negligence on the part of the employer to establish liability and the employer cannot use negligence on the part of the employee as a defense to a claim, according to the Minnesota Department of Labor and Industry. The agency noted that workers’ comp benefit costs have declined relative to payroll since early 2002. The Workers’ Compensation Research Institute reported that Minnesota implemented several system changes in 2013 that were directed at medical, indemnity, and vocational rehabilitation benefits, and this year put in place new hospital inpatient fee regulations. WCRI said that overall medical payments per claim in Minnesota have changed little since 2009, but a study by the institute identified growth in hospital payments as a key driver of moderate medical cost growth between 2005 and 2013.

Missouri: In the Middle of the Rate Pack

Missouri comes in at 21 for the highest workers’ compensation premium rates of the 50 U.S. states and the District of Columbia, just under Minnesota, according to the Missouri Department of Labor and Industrial Relations, Division of Workers’ Compensation. In 2014, the state’s premium rate index was $1.98 per $100 of payroll or 107 percent of the 2014 national median, $1.85, which was a 2 percent decrease from the national median in 2012.

The Missouri Department of Insurance reported that 206 workers’ compensation insurers in the state filed for 2016 rate decreases. The average rate decrease for 2016 is -2.57 percent. Fifty-eight companies increased rates in 2016; the average increase is 3.81 percent. No new workers’ comp companies have entered the state so far this year, and no companies have exited, according to the insurance department.