Workers’ compensation rates expected to decline

DENVER — Employers can expect lower workers’ compensation premium rates in 2018.

The National Council on Compensation Insurance is recommending a 12.7 percent decrease in rates for the coming year, according to a prepared statement from CCIG, an insurance brokerage based in Greenwood Village.

The trend reflects ongoing efforts by employers to prevent workplace injuries, as well as either declines or stable figures in frequency of claims, duration of claims, severity of injuries and medical costs, the statement said.

Not every employer will receive a 12.7 percent decrease. The rate will depend on insurance companies’ own calculations, which could vary from the NCCI’s proposed reductions. This year, for example, Pinnacol Assurance approved a 2017 decrease in workers’ compensation rates that averaged 3.2 percent for the insurer’s Colorado policyholders. That decrease exceeded the Colorado Division of Insurance’s recommendation of a 2.4 percent reduction.

The NCCI said its recommendation for 2018 rates was based on lower losses in 2015 compared to 2014. It also noted Colorado’s loss-time claim frequency has declined since 2011. And it said that insurance and medical average-cost-per-case figures decreased significantly in 2015.

Under the NCCI’s recommendations, some of the biggest drops could be seen by helicopter operations, casinos, taverns and even cemetery operations. Food-service companies, real estate appraisers and warehouses will see more modest drops, CCIG said.

Premiums are calculated in part based on a company’s experience modification factor. If claim costs are lower than average when compared with other organizations of similar type and size, then a company’s e-mod will be lower than 1, which means lower workers’ compensation premiums. On the other hand, if a company’s claim costs are higher than average, its e-mod will be over 1, increasing the premium.