Workers' comp rates continue decline.
Premium rates overall fell 5.8 percent for the voluntary market and 9.7 percent for the assigned risk plan.
"It's a real stable system right now," said Alan McClain, CEO of the Arkansas Workers' Compensation Commission. "There aren't a lot of issues right now."
In fact, McClain said, Arkansas' workers' compensation system is drawing attention from other states seeking a model of reform. He cited Oklahoma and Tennessee.
Workers' comp rates in the voluntary market have fallen 14 times since 1995. Those for the assigned risk plan have declined 13 times.
"Year 2001 saw our first increase in the assigned risk plan rates while experiencing a decrease in the voluntary market," Dan Honey, deputy commissioner of the Arkansas Insurance Department, said. He made the comments in the department's annual report to state legislators on the workers' comp insurance market.
"In 2011, Arkansas had the lowest loss costs in the region per $100 of payroll ($0.91) compared to the regional average loss cost of $1.43 and the countrywide average loss cost of $1.16," he said in the report, submitted in August. The average rates last year were 53 percent below those from 1996 "when the law changes went into effect," Honey said.
"There are still positive effects from this Act that benefit Arkansas employers," he said.
Before the 1993 overhaul of the workers' comp law, called the Workers' Compensation Reform Act, the state had only five voluntary carriers. Currently, 262 insurance companies write voluntary workers' comp policies in the state.
The voluntary market comprises those insurers that write policies voluntarily. The state requires employers to obtain workers' compensation insurance. When employers can't find an insurer willing to sell them a policy, they join the assigned risk plan.
"Some people wrongly call this the 'high risk' pool, which is not true," Honey told Arkansas Business. "Most of the businesses in the plan simply are too small for the voluntary companies to write them."
As of Dec. 31, 2011, insurance carriers in Arkansas had written $234 million in premium, Honey said.
The cost of claims in 2011 was $126.6 million, according to McClain. And in 2011, 7,647 indemnity claims were made. Indemnity claims are the payments made to injured employees to compensate for the loss of salary. They don't include medical bills.
In 2011, 4,295 Arkansas employers participated in the assigned risk plan. That compares with 5,143 in 2012. Honey noted that the "assigned risk plan is starting to grow after many years of decreases."
The economic downturn has caused voluntary insurance carriers to tighten underwriting standards and increase minimum premiums, Honey said. And the refusal of voluntary insurance carriers to write small policies has pushed more employers into the assigned risk plan.
By Jan Cottingham
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|Title Annotation:||SPOTLIGHT: Insurance|
|Date:||Oct 22, 2012|
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