Worker’s comp rates may fall 17%

• By TED GRIGGS
• Advocate business writer
• Published: Mar 11, 2009 - Page: 1D - UPDATED: 12:05 a.m.

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Louisiana employers should see their worker’s compensation insurance rates drop significantly this year, insurance industry experts say.

The National Council on Compensation Insurance found that the cost to pay for and handle worker’s comp claims is expected to drop 17.4 percent in Louisiana, Insurance Commissioner Jim Donelon said. Most of the state’s worker’s comp carriers use the council’s data in formulating their insurance rates.

Donelon said the drop in costs is great news for the state’s business community and will help economic development efforts in the wake of the hurricanes of 2005 and 2008.

Dennis Kokulak, state relations executive for the council, said it’s difficult to project the savings Louisiana employers will see.

Each insurance company must adopt the filing, and they may adjust their expense components in determining rates, he said.

“It’s safe to say the savings will be significant,” Kokulak said.

Donelon said worker’s comp loss costs have dropped more than 40 percent in the last three years.

Alen Bradley, chairman, chief executive officer and president of Amerisafe Inc., a DeRidder-based publicly traded firm that specializes in worker’s comp for higher risk industries, said the good news is that Louisiana is safer and the frequency of workplace injuries is down.

The bad news is that medical costs in Louisiana for worker’s comp claims are among the highest in the nation, Bradley said.

According to NCCI, medical costs made up 59 percent of total claims costs in 2007, compared to 46 percent in 1987.

Despite this, worker’s comp rates have been falling for the last 15 years nationwide and have dropped 44 percent in Louisiana since 1995, Kokulak said. That trend is expected to continue in the short term, although no one knows how much more the worker’s comp rates will drop.

“I guess at some point they will level off, but we don’t anticipate that happening in the next year or two,” Kokulak said.

There are a number of reasons the state has been able to reduce worker’s comp rates.