Experts deviate on which of changes in workers’ compensation will have the most impact, but most agree on one thing: Workers’ compensation insurance is going to be insane in 2014.
In many states, rates will increase as the amount of money the insurance companies charge for workers’ compensation continues to rise. However, this is not universal. In some states, there actually will be slight decreases.
But don’t get too excited; even in these outlier states the insurance companies are being much more selective about the companies they choose to insure. What these rate increases mean is that you will be writing a bigger check for workers’ compensation insurance in 2014, even if your business hasn’t grown substantially.
In 36 states, the National Council on Compensation Insurance (NCCI) is the rating bureau that determines the rules for workers’ compensation and calculates the experience mods. Beginning in 2013, a substantial change to the experience mod calculation occurred. In 1991, the split point between primary and excess losses was set at $5,000. In 2013 it ballooned to $10,000. In 2014 it’s going up to $13,500. And just to disprove the theory that what goes up must come down, in 2015 it’s predicted to go above $15,000.
The reason this amount keeps rising is simple; the cost of employee injuries dramatically has increased. Back in 1991, the average employee injury cost the insurance company around $3,000. In 2011, that amount was almost $9,000. Because of this dramatic change, the experience mod needed adjusting.