Low Workers' Compensation? ? Standard Insurance, Offices in ...

Low workers? compensation rates were one of the few financial bright spots for employers during the Great Recession, falling each year with reliability. But no longer. In California, premium rates are up 37% this year. Other states are following suit. After taking it on the chin for too long, carriers across the country are responding with double-digit workers? compensation rate increases, and in those states where rates are regulated by state insurance departments, demanding that regulators put aside politics and pay attention to their intensifying financial pressures. With a combined ratio of 120 and insurers paying out $1.20 for every dollar of premium they receive, the time has come to settle the score, they contend.

On average, workers? compensation increases are up 7.5% nationally, followed by commercial property at about 5%. Both lines of insurance are said to be leading the turn in the entire property-casualty market?not the best news for employers in an economy that remains stubbornly uncertain at best.

Several factors have conspired to tighten the workers? compensation market, but chief among them is timing. Rates had declined for so many years that an upwards shift was inevitable. On a per-employee basis, rates have fallen about 20% to 25% over the past five years. Something has to give. At some time the piper must be paid.

Explaining the ?Why Now?? If the piper gets his due, agents must tell clients why. It?s time to remind policyholders that the price of the coverage had fallen dramatically in recent years, and the increases of today simply represent a relatively small recoupment for all the discounting that was done the last six years.

The factors behind a workers? compensation rate hike are obvious?escalating medical care cost increases, which most people can appreciate.

While the apparent turmoil in the market puts agents in the hot seat, it also opens the door to assist clients at a very difficult time for businesses. Agents must take on a risk management advisory role, helping companies with their safety plans and return-to-work programs to enhance their chances of getting back a dividend on the paid premium. Workplace safety best practices are critical at this point and time. Clients need to drive a philosophy and culture of safety from the top down to the line level, so employees understand the impact of their behavior on their employers? cost structure. Effective return-to-work programs, which benefit both the employer and employees are necessary. The longer a person just sits there and watches TV, the greater the chance he or she will never return to work. And the greater the need for even bigger workers? compensation rate increases in future.

Business owners should plan to budget for an increase in their insurance costs in the next few years.

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