Delaware Insurance Commissioner Matt Denn announced today that he will order an average workers compensation insurance premium cut of 17.75 percent for Delaware employers in the “voluntary” workers compensation market, and a 22 percent cut for businesses purchasing through the state’s assigned risk pool.
He said these are the largest workers compensation premium cuts in Delaware since 1994.
With total workers compensation premiums paid by Delaware employers estimated at $103 million a year, the rate cuts ordered by Denn likely mean savings of at least $18.2 to Delaware businesses.
The premium cuts to be ordered are independent from additional premium savings that are expected from legislation passed by the General Assembly. The additional savings generated by the legislation are not scheduled to be seen until late 2008 or early 2009.
Denn said the premium cuts announced today are a result of changes he required in the way that workers compensation insurance companies reserve funds for future medical losses.
“Our experts told us that the workers compensation carriers were overstating the amount that they needed to aside for future medical losses,” Denn said. “When that extra money is set aside and not spent, the insurance companies keep it as profit. These rate cuts reflect a more realistic estimate by the insurance companies of what they really need to set aside.”
The orders pertain to applications by the Delaware Compensation Ratings Bureau, which submits an annual request for the loss cost calculations upon which all workers compensation insurance companies base their rates. The cuts are the largest since DCRB began submitting applications on behalf of the carriers in 1994.
Denn noted that the rate cuts he was ordering were averages, and that different ratepayers would see different rates based upon the type of business they were in and their individual loss experiences.
After Denn took office in January 2005, he made an independent actuarial review of the application and public comment part of the annual review process for the workers comp rate basis. He reduced a proposed increase in the workers comp basis for 2006 and then froze the average basis for rates for 2007.
Source: Delaware Insurance Department
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