South Carolina insurance regulators have approved an industry filing that lowers workers’ compensation insurance rates for employers by an average 9.8 percent.
Insurers can begin using the new rates in 30 days.
“This is the second year a decrease has been approved,” said Insurance Director Scott Richardson. “We are pleased to see this trend toward an improved economic climate and hope to see this continue into next year.”
Richardson’s department also reported a trend toward more private insurance coverage in the state. In 2008, the Assigned Risk Plan, South Carolina’s residual market mechanism, accounted for approximately 3.9 percent of the direct written premium for workers’ compensation in the state. This was a decrease from 7.7 percent in the previous year.
“This decrease indicates that the majority of all workers’ compensation insurance coverage is being written through the voluntary market thereby demonstrating a strong marketplace,” stated Director Richardson. “There are several reasons for this trend as we have seen an increase in employer safety programs, a decrease in claim frequency and changes in the severity of claims.”
Medical services account for approximately 42 percent of the total benefit costs incurred in workers’ compensation systems. This is a significant change from two years ago. Indemnity payments (i.e. wage replacement costs) now account for the majority of workers’ compensation costs. The primary reason for this shift is the change in the hospital fee schedule that was implemented in October 2006 , according to Richardson.
Richardson said rates should remain stabilized due to reforms enacted in 2007 that addressed administrative issues often cited as cost drivers. Among the changes was the elimination of the Second Injury Fund by 2013.
“We believe these reforms will help stabilize the rates in this market,” said Richardson. “We will continue to monitor this trend and assess the impact these reforms have on workers’ compensation rates in South Carolina as it will take several years to realize the full impact.”
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