Tennessee Approves 5.6% Cut in Workers’ Comp Loss Costs; COVID Impact Uncertain
The Tennessee commissioner of commerce and insurance has ratified a 5.6% decrease in workers’ compensation loss costs for voluntary market in 2022, which will result in the ninth straight year of rate decreases for many businesses in the state.
“These reductions reflect the continued trend of safer workplaces and will mean Tennessee employers may now have more money to invest back into their businesses and employees, which will help bolster Tennessee’s economy,” Commissioner Carter Lawrence said in a bulletin posted Tuesday.
As in previous years, the reduction is greater than what some analysts had recommended. An actuarial firm hired by the Tennessee Workers’ Compensation Advisory Council recommended a 5.3% decrease in voluntary loss costs. An actuary’s report to the insurance department suggested a 3.3% reduction.
The NCCI filing was based on policy years 2018 and 2019. Manufacturing and contracting classifications will see the largest decreases, of 6.5% and 6.1%. The filing noted that the effect of the COVID-19 pandemic remains uncertain, and pandemic data was not included in the loss cost calculations. But the NCCI also recommended a change in the catastrophe premium endorsement to include pandemics in the future.
By the Numbers Actuarial Consulting, in its report to the Advisory Council, noted that 75% of all COVID-related workers’ comp claims have come from health care workers and first responders. The dollar amount of those claims is small enough to have little effect on overall rates but could affect individual classifications.
For class code 9040, which includes non-professional hospital employees, for example, data showed a 3.1% increase in loss costs in 2020.
“If we were to assume that the pandemic will continue into the effective period at the current rate of infection, an upward adjustment to the data for the increased exposure and infection rate would be needed to provide for these losses,” said the By the Numbers actuarial report, submitted in October.
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