South Central Workers’ Comp Markets Show Signs of Improvement
Workers’ comp premium rates in Arkansas will continue on the declining path they have followed since the state passed workers’ compensation legislative reform in 1993, when a 12.8 percent rate decrease takes effect on July 1, 2008.
Arkansas Insurance Commissioner Julie Benafield Bowman said that including this year’s rate decrease, the state’s workers’ compensation premiums are approximately 52 percent lower than they were in 1995. She attributed the decline to the passage of the reform measures and to the implementation of high workplace standards and aggressive health and safety programs.
Meanwhile statewide premium volume has grown since 2001, Bowman said, along with wage and employment growth during the same period.
Arkansas Workers’ Compensation Market
Source: Arkansas Insurance Department
Louisiana Insurance Commissioner Jim Donelon announced in March that rates for workers’ compensation insurance are on the decline in his state. Figures from a report from the National Council on Compensation Insurance (NCCI) showed Louisiana with an 8.6 percent drop in loss costs, Donelon said. However, Louisiana still has a fairly high rate of workers’ compensation costs per claim according to the Cambridge, Mass.-based Workers Compensation Research Institute.
Most workers’ comp carriers in Louisiana use the NCCI annual loss cost filing report to help formulate their insurance rates.
Companies were expected begin filing for a rate decrease with the Department of Insurance around late March and continue through September 2008. Companies can begin using the lower rates within approximately 45 days after approval. This reduction follows a 15.8 percent reduction in Louisiana workers’ comp rates in 2007.
The total Louisiana workers’ compensation market is estimated at $1.03 billion. The Louisiana Workers’ Compensation Corporation is the largest workers’ comp carrier in the state, with approximately 22,000 policyholders.
Created in 1933, Oklahoma’s state fund for workers’ compensation, CompSource Oklahoma, has long been the largest workers’ comp carrier in the state. In 2006 it held approximately 40 percent of the workers’ comp market, but Oklahoma Insurance Commissioner Kim Holland says during the past two years, other carriers have been picking up some of the business that previously went to CompSource. Holland says the market is “reasonably competitive” now, partially because of the soft market that characterizes other property and casualty lines.
“We’ve got a number of companies which are stable … so our market … at this point is doing quite well. We measure that in large part by watching the decline in the amount of business that’s being held in our state fund,” Holland said.
Two years ago that was not the case. Concerned “the state fund was unnecessarily or inappropriately competing with private industry,” the department began “looking at historical evidence of participation in the state fund. By the following year we were already seeing a decline in the amount of business held there, which is an indicator that our market is picking up some of the risks they weren’t otherwise,” she said.
CompSource Oklahoma had more than $288 million in direct written premium in 2006. The next largest carrier in terms of market share, American Home Assurance Company, had around $39 million in direct written premium. The third largest workers’ comp carrier was Commerce & Industry Insurance Co., which had more than $37 million in direct written premium in 2006.
Direct written premium for 2006 totaled $712,260,135 in Oklahoma.
CompSource now has the opportunity to grow with out-of-state writings. The 2008 legislature approved and Gov. Brad Henry signed House Bill 1959, which allows the company to extend workers’ comp coverage into other states for Oklahoma-based businesses that have employees permanently working outside Oklahoma. CompSource says it will write the coverage by agreement with licensed carriers in the various states.
Texas has been facilitating massive changes in its workers’ compensation system since the legislature passed a major reform package in 2005, demolished the former Texas Workers’ Compensation Commission and folded its responsibilities into the Texas Department of Insurance under a separate Commissioner of Workers’ Compensation.
One of the major aspects of reform was the authorization of the use of workers’ compensation of health care networks for the provision of services to injured workers. As of early May there were 32 networks approved for that purpose. The jury is still out as to the success of network implementation from an injured worker standpoint. The first health care network “report card” published by the Division of Workers’ Compensation in September 2007 showed that costs for network medical care was higher for some types of injuries compared with cost of care for those types of injuries outside the networks.
“Overall, network injured workers surveyed were less satisfied with the medical care they received than non-network injured workers,” the report card stated. However, the DWC pointed out that at the time the report card was published it was “too early to fully evaluate the differences between network and non-network claims given the relatively small population of network claims and the early stages of network implementation.”
Texas had 91 insurance groups and 223 companies writing workers’ comp premium in 2006. By the end of 2007 that number grew to 98 groups and 236 companies.
Texas Workers’ Compensation Market
Source: Texas Department of Insurance Report to the Legislature, Q4 2007