MO. HEADING FOR LOWEST COMP RATE HIKE SINCE 2000:
Results from 2004’s first nine months indicate Missouri should post its lowest rate of premium increases for workers’ compensation insurance since 2000, according to Department of Insurance Director Scott Lakin. With 206 insurers filing rate changes for 2004, overall market rates have increased only 1.9 percent, Lakin said, compared to 14.7 percent last year. “These figures show Missouri’s business community got relief as rate pressures eased in 2004, after three years in which premiums increased substantially to cover the rising costs of medical care for injured workers,” Lakin said. Actuarial studies indicate a steeper decline in workplace injuries is offsetting the steadily increasing cost of medical care. Workplace injuries in Missouri–although most do not result in claims–fell from 174,000 in 2001 to 147,000 in 2003, or 16 percent. For the year ending in June, injuries dropped again to 143,000. Overall, Missouri businesses now pay rates that are only 3.7 percent higher than when the state deregulated pricing more than a decade ago. Average Missouri workers’ comp rates fell steadily after the state deregulated rates in 1994 for the first time since the program began 80 years ago. For six years, competition kept rates low while businesses and their employees focused on greater workplace safety that reduced injuries and costs. The rate of reduction in injuries, however, slowed in the late 1990s, just as medical inflation began accelerating. Medical costs now account for more than half the benefits paid under workers’ comp; the remaining benefits cover lost income. Missouri businesses consequently faced average rate increases of 4.7 percent, 9.2 percent and 14.7 percent from 2001 to 2003.
In 2004, 109 workers’ comp insurance companies filed rate decreases averaging 2.4 percent while 97 increased rates an average of 8.6 percent. Those companies account for virtually all the coverage sold in Missouri. MDI uses a system that weights rate increases based on an insurer’s sales in the state to calculate an overall change.
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