Colorado employers will see a small increase in workers’ compensation insurance premiums next year. The increase–within the loss-cost component of the insurance–will be half of what it was last year.
The Colorado Division of Insurance announced that the “loss costs” component of workers’ compensation premiums will go up 2.6 percent next year. The increase this year was 5.2 percent.
Loss costs are the average cost of lost wages and medical payments of workers injured during the course of their employment. Factors that may increase workers’ compensation costs include frequency, duration of claim, number of treatments for each claim, severity of injury, increasing medical costs and overall costs to cover workers’ compensation claims.
“Increasing claim costs and increasing frequency of claims continue as trends,” said Commissioner of Insurance Marguerite Salazar. “However, Colorado employers and employees continue to improve safety and reduce losses.”
The National Council on Compensation Insurance (NCCI), a rating and advisory organization, collects annual data on workers compensation claims for the insurance industry and publishes loss costs that form the basis for all workers compensation premium determinations. All insurers in Colorado use the NCCI loss costs as a base. Each insurer’s own expenses are added to the NCCI’s loss costs to arrive at the rates charged to employers. Thus each employer’s specific rate change may differ from the 2.6 increase.
The projected loss cost figures for 2014 were presented by NCCI at a Sept. 12 hearing at the Division of Insurance offices. Both NCCI actuaries and independent actuarial consultants contracted to assist the DOI reviewed the analysis for all of the industrial classes in Colorado. The NCCI filing, the actuarial analysis and public comments are used by the insurance commissioner to establish the loss costs used for premium rates for the following year.
To view the NCCI loss cost filing, individual classification codes, reports, and the final order of approval from the insurance commisioner, visit the Workers Compensation page of the DOI website.