The Rhode Island Department of Labor and Training (DLT) announced last week that it has cut the administrative assessment rate charged to insurance companies providing workers’ comp coverage in Rhode Island.
For fiscal year 2015, DLT has reduced the rate to 6.65 percent from 6.75 percent of insurance companies’ total net workers’ comp premiums.
Officials said this is the first assessment rate reduction since 2003. Based on the net premiums collected in fiscal year 2014, a rate drop of one-tenths of a percentage point will save insurers about $250,000 from July 1, 2014, to June 30, 2015, according to DLT actuarial data.
Rhode Island’s state law gives the DLT director the power and discretion to set workers’ comp assessment rates annually according to the fiscal year calendar. By law, DLT finances the entire workers’ comp system using a”net assessable premium” formula. Workers’ comp is a form of no-fault insurance designed to help employees injured at work pay for medical expenses and make up lost wages.
Rhode Island DLT Director Charles J. Fogarty said he made the decision after examining end-of-year financial records for the department’s Workers’ Compensation Division and projecting how much money it would need to cover its costs over the next fiscal year.
“Because of the improving economy and the effective administration of the workers’ compensation system, we are able to pass along savings to the insurers who provide this very important coverage, which protects workers and companies equally,” Fogarty said in a statement on August 21.
Workers’ compensation premiums are based on payroll. Officials said that as the Rhode Island economy has improved, more workers are on company payrolls, and therefore, the premium base has grown.
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