19% Workers’ Comp Rate Decrease Proposed for Tennessee

The National Council on Compensation Insurance (NCCI) has filed for a 19.1 percent decrease for workers’ compensation voluntary market loss costs in Tennessee – the largest recommended decrease since reforms to the state’s workers’ compensation system were passed in 2013.

The filing, made toward the end of August, is based on premium and loss experience for policy years 2015 and 2016, according to a filing executive summary released by NCCI. If approved, the rates would go into effect March 1, 2019.

NCCI said the proposed decrease is attributed in part to a continued decrease in Tennessee’s lost-time claim frequency. NCCI noted that both indemnity average cost per case and medical average cost per case have remained stable in recent years after adjusting to a common wage level.

The proposed changes in voluntary loss cost level by industry group are as follows:

If approved, the rate decrease would be the eighth consecutive reduction in workers’ compensation rates. Last year, NCCI filed for a rate reduction of 12.6 percent and a 12.8 percent reduction was approved in 2016. Insurance carriers combine NCCI’s loss cost filings with company experience and expenses to develop insurance rates. In 2017, the Tennessee Department of Commerce & Insurance noted last year that since Tennessee introduced significant changes to its workers’ compensation system in 2014, NCCI filings have totaled loss cost reductions of more than 36 percent.

The workers’ compensation reforms that took effect in 2014 included the creation of a new administrative court system to handle workers’ comp claims – moving the state’s claims process from a tort system to an administrative one. The reforms also established medical treatment guidelines and provided a clearer standard in determining to what degree an injured worker’s medical condition may have contributed to the cause of an on-the-job injury.

In June, a study by the Workers Compensation Research Institute (WCRI) attributed a drop in the average total cost per workers’ compensation claim of 6 percent in 2015 in part to the state’s workers’ comp system reforms.

“Most of the 6 percent decrease in the average total cost per workers’ compensation claim in Tennessee was from a 24 percent decrease in permanent partial disability (PPD) benefits,” said Ramona Tanabe, WCRI’s executive vice president and counsel, in a statement at the time.

A spokesperson for TDCI said the figures are preliminary and still need to be examined by actuaries. Commissioner Julie Mix McPeak has 90 days from the filing date to make a decision on the filing.