Montpelier, VT – Governor Phil Scott recently announced that workers’ compensation insurance rates will continue to improve for a second year in a row. It will cost less for most Vermont employers when the new rates approved by the Department of Financial Regulation (DFR) become effective on April 1.
“I am pleased to announce this substantial decrease in workers’ compensation rates, which will directly lower the cost of doing business in Vermont,” said Scott. “This is good news for Vermont employers and the overall Vermont job market. These considerable savings will contribute to making Vermont a more affordable place to do business and creates more opportunity for businesses to thrive, grow their operations and support more workers.”
The continued improvement is based on several factors.
Over the past three months, in conjunction with an outside actuary consulting firm, DFR conducted an extensive review of the workers’ compensation rates filed by the National Council on Compensation Insurance (NCCI). With a new perspective gained through the review and additional recommendations from the consultant, the Department was able to recommend even greater rate relief.
There were overall reductions of 3.7 percent in voluntary lost costs and 7.6 percent in assigned risk rates. This is the second consecutive year both loss costs and assigned risk rates have been reduced, with aggregate reductions of 11.6 percent and 15.6 percent respectively over the last two years.
In addition, DFR directed NCCI to remove a surcharge applied to the assigned risk market – as recent experience no longer justified the expense – resulting in additional premium relief of 6.7 percent for Vermont employers in the assigned risk market.
Vermont’s log hauling industry will receive the greatest benefit from this year’s filing, as DFR directed NCCI to combine the log hauling employer class with the contract trucking class, resulting in a 24 percent rate reduction for log haulers while having no impact on the contract trucking industry.
In the aggregate, these actions should lead to Vermont employers paying approximately $10 million less in workers’ compensation premiums when the new rates take effective on April 1.
The reduction in workers’ compensation costs are also driven by improvements of the frequency (number of workplace injuries) of claims, down 7.2 percent in past five years and 11.5 percent in the past three years. The severity (average cost per claim) of indemnity (wage replacement) and medical (treatment and services for injuries) claims have also improved, down 10.5 percent and 4.6 percent respectively over the past 5 years.
The decreased frequency and severity of claims is indicative of improved workplace safety practices.
“Reducing costs in the assigned risk market is particularly good news as many important Vermont industries, such as log hauling and dairy farming, as well as new start-up companies, can only obtain coverage through this market,” said DFR Commissioner Michael Pieciak. “Affordable insurance will reduce the barriers to market entry, encourage compliance and even spur job growth – all of which will further improve rates in the long run.”
“I applaud the Department’s Insurance Division, particularly Director Kevin Gaffney and Jessica Sherpa, for taking a hard look at this year’s filing and implementing creative solutions to reduce the cost of workers’ compensation insurance for Vermont business owners. I also thank NCCI for continuing to be a good partner as we seek to improve Vermont’s workers’ compensation market,” added Pieciak.
See the announced rates here: VT DFR Workers’ Compensation Insurance Information & Resource Page