For Immediate Release Contacts: Gena Arthur October 21, 1996 Jennifer Gullette (919) 733-5238
RALEIGH - Insurance Commissioner Jim Long today announced that he has approved a 13.7 percent average decrease in the base rates paid by North Carolina businesses for workers compensation insurance, which represents a savings of $70 million. "This announcement is especially good news for businesses in our state because it follows last year's workers comp rate decrease of 15 percent, which resulted in a savings of $92 million," said Long.
"The current filing from the Rate Bureau also reflects some positive industry trends such as improved loss experience," said Long. "These positive trends may well continue as insurers are increasing their efforts to contain claim costs, reduce fraud, and reduce their expenses. North Carolina currently enjoys the 8th lowest workers compensation costs in the country according to a 1995 study published in National Underwriter magazine," Long said. "And the current filing calls for an average reduction of 13.2 percent for the assigned risk market."
Under the loss costs system established by the General Assembly during the 1995 summer session, the North Carolina Rate Bureau files a base rate with the Department of Insurance on behalf of all workers compensation carriers in the state. This "loss cost" covers the cost of paying claims. Each insurance company then adds in overhead expenses and profit to determine its final rate. These individual rates also must be filed with, and approved by, the department allowing businesses to compare prices and shop for the best rate. This method is an improvement over the prior system in which one flat rate was filed for all insurance companies.
"The idea is to inject more competition into the workers compensation system," said Commissioner Long. "Under the loss costs system, companies whose rates include too much profit or excessively high overhead will find themselves at a competitive disadvantage. Companies will be strongly motivated to keep rates down to retain market share."
Under the loss costs legislation passed by the General Assembly, companies may continue to use the rates in effect when the bill was passed until July 28, 1997. The effective date for implementation of the new loss costs rate is April 1, 1997.
State law requires businesses with three or more employees to purchase workers compensation coverage, which pays lost wages and medical bills for employees injured on the job.
Filing Rate Requested Rate Implemented Statewide Premium Consumer Savings Year 1985 12.9% 7.5% $289,077,233 $15,610,171 1986 12.8% 5.8% $363,134,574 $25,419,420 1987 16.8% 15.9% $419,796,824 $3,778,171 1988 (no filing) 1989 16.8% 9% $509,210,148 $39,718,392 1990 29.3% 18.9% $541,485,184 $56,314,459 1991 41.8% 15.8% $575,129,570 $149,533,688 1992 40.3% 33% $650,405,437 $47,479,597 1993 15.5% 9.3% $664,000,000 $41,168,000 1994 (no filing)
1995 -15.3% -15.3% $603,000,000 $92,259,000 1996 -13.7% -13.7% $511,000,000 $70,000,000 Total Savings $541,280,898
For more information, contact the N.C. Department of Insurance -- http://www.doi.state.nc.us/DOI/
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