Report: South Carolina Workers’ Comp Market Stable With Plenty of Capacity

By | May 2, 2017

The South Carolina workers’ compensation market is strong, according to the state department of insurance’s most recent report, as the first reform to the state’s workers’ comp system in almost a decade readies to complete a full year of enactment and an assessment may be on its way out.

The South Carolina Department of Insurance’s (SCDOI) annual report “Workers’ Compensation Insurance Coverage: The State of the South Carolina Market,” submitted in Dec. 2016, says the state’s workers’ comp market is stable, with plenty of coverage availability.

In 2015, there were 979 companies writing coverage in the state in 2015, down from 987 companies in 2014 and 982 in 2013, but the past five years have been stable compared to the net gain of insurance groups entering the workers’ comp marketplace in the surrounding Southeastern states, the report said. The top five insurer groups – Zurich, Hartford, W.R. Berkley, BCBS of MI, and American Financial – accounted for 39 percent of South Carolina’s 2015 workers’ comp market, up from 36 percent in 2014.

Overall, insurance companies provide 69 percent of South Carolina’s workers’ comp coverage with the remaining coverage provided through group self-insured funds and individual self-insured employers. The state’s residual plan, the South Carolina Workers’ Compensation Insurance Plan, wrote 4.1 percent of 2015’s total direct premium writings in the state, down slightly from 4.5 percent in 2014.

Workers’ comp made up 9.1 percent of all the state’s property and casualty premiums written in 2015. Direct written premiums for workers’ comp totaled $729 million in 2015 (including $33 million in residual market premium), an increase of $27 million from 2014, with the increase likely the result of increased payrolls, loss cost increase for some job classifications, and occasional increases to company loss cost multipliers.

Loss costs from the state approved rating organization, the National Council on Compensation Insurance (NCCI), increased by 1.9 percent and 2.5 percent in 2015 and 2016, respectively, after decreasing 7.4 percent in 2014.

“The frequency of lost-time claims, a large component and cost driver, was stable over the past few years,” the report states. “The medical severity was relatively flat from 2010 to 2012 but increased 14.3 percent in 2013, while indemnity increased for the second consecutive year.”

The report also notes the new legal requirement passed by the South Carolina Legislature last year, the first reforms made since 2007, requiring all insurers in the state to file to adopt approved NCCI loss costs.

The 2016 legislation made it a legal requirement for workers’ comp insurers to file loss cost adoptions or loss costs multipliers with the SCDOI. Insurers’ intent to adopt the rate filing must be submitted within 60 days of the approval date of the new loss costs in accordance with the new law.

Insurers must also now implement the latest NCCI loss costs within 120 days from the new loss cost effective date. SCDOI said in its report the new law, which amends the 1976 Code of Laws of South Carolina relating to rate filing requirements, was in response to concerns raised by SCDOI that the use of older, outdated loss costs was inappropriate.

In addition, the termination of the South Carolina Second Injury Fund (SIF) assessment on insurers is scheduled to be phased out this year in accordance with the state’s 2007 workers’ comp reforms that enacted a transition plan to close out the fund beginning in 2013. The report notes that following the 2017 assessment, additional analysis will be necessary to determine whether there is a need for an additional assessment, however, SCDOI is “hopeful that SIF assessments will no longer be an issue or a component of loss cost multiplier filings in the near future.”

About Amy O'Connor

O'Connor is the Southeast editor for Insurance Journal and associate editor of More from Amy O'Connor

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