Posted on: Saturday, November 2, 2002

Workers' comp rate increase rejected

By Frank Cho
Advertiser Staff Writer

The state has rejected a request by the insurance industry that would have increased the single-biggest segment of workers' compensation rates by 16 percent starting Dec. 1.

The National Council on Compensation Insurance, which represents the industry in tracking and setting rates, had asked the state's insurance commissioner to raise the so-called "loss-cost" portion of workers' comp rates by an average of 16 percent.

Insurance executives have said growing losses related to rising medical costs and increased workers' comp claims have made current rates inadequate.

"The NCCI did not adequately take into account the fact that Hawai'i workers' compensation claim experience has been more favorable than in other states," said Wayne Metcalf, Hawai'i insurance commissioner. "In fact, the most recent information indicates that Hawai'i's loss experience is improving at a substantial rate, and the filing placed far too little weight on those improvements."

If the state had approved the full request, it would have been the third increase in workers' comp rates this year and would have raised workers' comp costs to employers by $24 million.

A spokesman for NCCI could not be reached for comment yesterday.

Insurance executives, however, said there has been a great deal of upward pressure on workers' comp rates during the past couple of years because of sharp increases in medical costs. But intense competition among insurers has helped to keep rates down.

"This is not unique to Ha-

wai'i, it's a national phenomena," said Steve Tabussi, vice president of marketing for First Insurance Co. of Ha-

waii. "There ain't nobody getting rich selling workers' comp insurance."

The state last approved increasing the "loss-cost" portion of workers' compensation rates in February when the industry was allowed a 4.6 percent increase, or about half the amount the industry had requested and said was needed to cover its costs.

In January, insurers raised rates 3.5 percent, citing increased disability costs for Hawai'i workers.

The "loss-cost" portion of workers' comp rates is directly related to covering the cost of claims and does not include the expenses, taxes or profits of insurers.

It represents about 60 percent of the premium employers pay insurers, and is used as the basis for all workers' comp insurance rates in Hawai'i.

NCCI could resubmit its filing request, but state insurance regulators said the new filing will have to take into account Ha-

wai'i's improving loss experience to a greater degree.

Reach Frank Cho at 525-8088 or at fcho@honoluluadvertiser

.com.