Group favors rate cut for workers’ comp

Posted Oct. 21, 2009, at 11 p.m.

AUGUSTA, Maine — Maine employers will see an average 7 percent decrease in workers’ compensation insurance rates next year under a proposal filed with the state Bureau of Insurance. The new proposed rate results from businesses improving workplace safety.

“This is great news,” said David Clough, Maine director for the National Federation of Independent Business. “Saving any money at this time of an economic recession is good news.”

He cautioned that while the proposal, if approved by the Bureau of Insurance, will make the average rate go down, some employers will receive larger decreases, while others might see increases. He said the decrease is particularly good for the small businesses NFIB represents because they are experiencing increases in the costs of utilities and in other insurance policies, such as health insurance.

“This will help with the cost of doing business,” he said, “and those overall increases are causing small businesses to struggle.”

Peter Gore, vice president of the Maine State Chamber of Commerce, said the expected decrease in rates will help all employers in the state at a time when they can use any help. He said employers are doing a better job at workplace safety.

“The best way employers can lower their workers’ comp costs is to make sure they do not have an accident in the workplace,” he said.

Laura Backus Hall is the state relations executive for the National Council of Compensation Insurers, the organization that provides workers’ compensation insurance and employee injury data and statistics to many states, including Maine. She said the group filed a report with the bureau indicating rates should be decreased in the state as a result of fewer claims. If accepted, the rate change will take effect Jan. 1, 2010.

“The cost of the system continues to go up, but because there are [fewer] claims, that is offsetting the increase in costs,” she said. “This is happening countrywide, not just in Maine.”

Some New England states are seeing recommended increases in rates, and in neighboring New Hampshire, the rates are recommended to go down by less than a percent, she said.

Gore said that while workers’ comp insurance rates may go down, the costs of the overall workers’ comp system are increasing. He said that while many in the country look at workers’ comp as wage replacement for an injured worker, in Maine the cost of medical care for a worker injured on the job is larger than wage replacement.

“We pay whatever the health care provider tells us to pay,” he said. “We don’t get to negotiate rates. We don’t pay what other third-party payers pay. We pay [the] cost of charges. In many ways, employers are subsidizing the health insurance system.”

Gore said that is one reason employers have been pushing the Workers’ Compensation Commission to set rates for medical services paid under the comp law. He said that one step would lower system costs.

Gov. John Baldacci said the filing is “terrific news” and it is the latest in a series of reductions since the workers’ comp system was reformed in 1993. He was a state senator when the reforms were passed and praised then-Gov. John McKernan for his leadership in creating the new system.

“We were on the brink of disaster back in 1993,” Baldacci said. “Since 1993, with this reduction of 7 percent, there will be a 50 percent overall reduction in workers’ compensation premiums since then.”

Baldacci also praised the Maine Employers Mutual Insurance Co., created by the Legislature as part of the reform legislation, for its leadership in safety programs that have contributed to the decrease in rates.

“That’s too often overlooked,” he said.

Backus Hall said another factor is the recession. She said accident numbers among less-experienced workers are higher than with experienced workers, and that employers are not hiring as many new workers nowadays.

Clough said that when the state moves out of the recession and businesses start expanding, there may be an increase in use of workers’ comp because of an increase in accidents among inexperienced workers, resulting in a rate increase in the future.

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