Posted on May 19, 2014
With rising business expenses nationwide, it comes as a pleasant surprise when companies receive news that their insurance costs are decreasing. And, that's just what's happening in Kentucky for employers with workers compensation insurance.
Over the past six years, Kentucky has lowered their workers compensation rates for a total of almost 40 percent overall. The last rate decrease took effect October 1, 2011. These workers comp rate decreases are due in part to the reduction in the loss cost part of the rate. The loss cost is the amount of money that insurance companies pay for medical and wage benefits. From this loss cost rate, companies add their own costs to determine final rates passed onto employers.
The National Council of Compensation Insurance (NCCI) reports that Kentucky's efforts to stabilize claim frequency and improve benefit costs have added to their ability to provide these decreases. With falling claims and medical costs leveling out, the rates have settled in at appropriate levels. Overall, however, the workers compensation insurance premiums have dropped as well. Most likely this is caused by high unemployment and lower employer payrolls.
There is one industry in Kentucky that has not experienced reductions in workers compensation insurance rates - the coal companies. Classifications for the coal industry have actually increased by 1.8 percent for underground class rates and 1.1 percent for operations on the surface.