Nevada Workers’ Comp Loss Costs, Risk Rates to Decrease

Nevada Insurance Commissioner Scott Kipper has approved revised
workers’ compensation voluntary loss costs and assigned risk rates filed by the National Council on Compensation Insurance (NCCI). The revised loss costs and assigned risk rates are effective March 1, 2009, and will apply to employers on their anniversary rating dates.

Voluntary loss costs are decreasing an average of 5.5 percent and assigned risk rates are decreasing an average of 6 percent. The changes vary by classification.

NCCI also adjusted the experience rating formula to bring the average experience modification closer to 1. Experience rating is used to encourage employers to maintain safe workplace environments. Under experience rating, employers with better than average recent
historical loss experience pay less premium than those with poorer than average loss experience for the class of business. Experience rating applies to all but the smallest or newest employers.

An average experience modification of 1 is ideal because it most fairly allocates costs between risks eligible for experience rating and those not eligible. The impact of this adjustment is approximately a 0.3 percent premium increase, overall. With the change to the experience
rating formula, the overall voluntary premium decrease is 4.6 percent and the overall assigned risk premium decrease is 5.7 percent.

Workers’ compensation rates are per $100 of payroll. When comparing Nevada rates to those of other states, the Department of Insurance said it important to remember that Nevada payrolls are capped at $36,000 per employee per year. Other states (with the exception of North Dakota) do not have general payroll caps that apply to all employees. When the impact of the Nevada payroll cap is factored in, Nevada rates compare more favorably to those of many other states for many classifications.

Commissioner Kipper noted that lower workers’ compensation rates will benefit Nevada businesses in these difficult economic times and will make Nevada an even more attractive place to do business.

Commissioner Kipper also emphasized that the NCCI loss costs are only one component of the rates charged by insurers. Each insurer must file a loss cost multiplier to include expenses and profit. As a result, not every insurer charges the same rate. Employers are urged to comparison shop for the best rate. Such behavior is essential to maintain an efficient and competitive marketplace.

To view the changes by classification, visit http://www.doi.state.nv.us/Press-VoluntaryLoss.pdf.

Source: DOI