Iowa employers could see the first decrease in workers’ compensation rates in five years on Jan. 1, if the state’s insurance commissioner approves a proposed rate filing for 2014.
In a regulatory filing with the Iowa Insurance Division, the National Council on Compensation Insurance Inc. has recommended an overall average decrease of 2 percent in workers’ compensation “voluntary filing” rates that apply to most businesses.
However, companies in the “assigned risk rate” category, which represents about 5 percent of the Iowa workers’ compensation market that can’t find coverage at standard rates, would pay a proposed 1.9 percent increase in rates, according to the filing posted Monday on the division’s website.
This year, the insurance division phased in a 7.7 percent increase in both the voluntary and assigned risk categories by increasing the rate in January and again in July. The overall average voluntary rate has increased in each of the past four years by as much as 9.1 percent and last decreased in 2009 by 3.8 percent.
Nationally, average workers’ compensation rates increased by 8.3 percent in the second quarter of 2013 and have increased for nine consecutive quarters, longer than any other commercial line of insurance, according to the Insurance Information Institute.
In 2012, Iowa businesses paid an estimated $674 million in workers’ compensation premiums, a 12.7 increase in written premiums from 2011.
The proposed rates for 2014 are based on NCCI’s analysis of the state’s workers’ compensation premiums and losses from policy years 2010 and 2011, evaluated as of Dec. 31, 2012. Based in Boca Raton, Fla., NCCI is a data analysis company that serves as Iowa’s licensed rating and statistical organization.
According to NCCI’s analysis, average rates can be decreased because workers’ compensation claims frequency by Iowa employers decreased in 2011, and average indemnity costs “improved markedly after years of deterioration.”
At the same time, however, “the loss experience in the assigned risk market has deteriorated relative to the voluntary market in recent years,” the report said.
Employers have 15 days from the date of the filing to request a hearing with the Iowa Insurance Division on the proposed rates.