BOISE – Base worker’s compensation insurance rates for Idaho employers will decrease by 7% in 2022, providing what the state’s insurance chief says should be a boost to “not only Idaho businesses and their employees, but also the economy in general.”
Employers purchase worker’s compensation insurance to cover medical costs for employees who suffer on-the-job injuries. Each year, the National Council on Compensation Insurance reviews claims volume, utilization, workforce, wages, and legislative changes to arrive at recommended base rates for each state.
Idaho state Insurance Director Dean Cameron said, “I will say that I think we have still room for improvement, looking for other ways to lower workers comp costs. I think there are some other things we can look at down the road, but it’s complicated, and it takes a step at a time.”
Idaho’s rates are currently slightly lower than Montana’s, but higher than Oregon’s or Nevada’s. Utah has lower rates than Idaho, Cameron said, “but they have lower benefits.” Differences between states can be related to everything from industry mix to health care costs.
The rate decrease for 2022 comes largely because of lower claims and utilization of the workers comp system in the time period that NCCI studied to come up with its 2022 recommendation for Idaho, which included 2018, 2019 and part of 2020.
The pandemic did have an impact on claims and utilization in 2020, Cameron said, “although at this point in time it appears to be pretty minor,” as far as the full time period. “There’s no question we had less people working and less claims being submitted,” during the coronavirus shutdown.
A small factor in the decrease, Cameron said, was legislation that passed unanimously this year to update state laws regarding insurance codes. HB 78 included eliminating an outdated provision that set both minimum and maximum rates for workers compensation insurance rates, which was providing something of a perverse incentive for carriers to just charge the maximum. He said NCCI calculated that a little less than 1% of the decrease it recommended was due to that change.
Rates that individual employers pay will vary based on the type of industry and its risk of employee injury, along with claims history.
Once the NCCI recommendation is published, individual insurance carriers can apply for deviations of up to 15% above or below the recommendation. Cameron said the State Insurance Fund, which functions as something of a carrier of last resort, typically comes in about 10% below the NCCI recommendation in its rates.
Overall in 2022, he said, “Rates should go down, and if they’re not going down, the employer should be saying: Why are my rates not going down? What is causing me to be more expensive than others?”
“The bottom line is employers should visit with their agent, and should consider their workers compensation plan,” he said. “And if the rates aren’t going down at renewal, whenever their renewal is, then they should have that hard conversation.”
Employers pay for workers compensation insurance, but Cameron said employees also will benefit from the rate decrease next year because of the impact on their employer’s overall profitability. “In these tough times, where they’re trying to retain employees and wages are increasing dramatically, that savings will, in my opinion, probably get eaten up in salaries and in wages,” he said. “It will be a help or an assistance to those employers and employees as they work through those negotiations.”