Workers compensation rates likely to rise in Nevada in '07

Workers compensation rates probably are headed up in Nevada next year after three years of decreases.

The National Council of Compensation Insurance, which tracks workers compensation loss rates, called for a 3.4 percent average increase in Nevada next year.

In addition, the filing by the National Council of Compensation Insurance calls for a change in experience rating that will add another 1 percent to the increase. Under experience ratings, employers with better-than-average safety records pay less than companies in their own industry with poorer-than-average records.

The filing would take effect March 1 if it's approved by State Insurance commissioner Alice A. Molasky-Arman. She said she expects to act within a month.

The filing from the national council is one of two components involved in determining workers compensation rates in Nevada.

All insurers are required to use the council's numbers in determining their loss experience, but each insurance company adds on an additional amount to cover its expenses and profits.

The 3.4 percent average increase in the national council's filing would cover companies that can get workers compensation coverage on their own coverage that's known as "voluntary."

Companies that are unable to get coverage on their own are placed into an assigned-risk pool, and the council calls for an average increase of 5 percent in rates for that coverage.

The proposed increases vary widely by industry.

For instance, the national council says recent loss experience dictates a 13.7 percent increase in rates for office and clerical workers in the voluntary pool. Contractors in the voluntary pool, meanwhile, would see a 2.6 percent increase and manufacturers would see a 1.1 percent decline.

Generally, the proposed increases are higher for assigned-risk coverage.

The increase sought in the national council's filing is the first in four years. Molasky-Arman said increasing medical costs as well as cost-of-living increases in workers compensation benefits approved by the Legislature in 2003 contributed to the call for higher rates.

Despite the increase, Nevada's workers compensation rates remain below those of California a fact that's been a key selling point in efforts to woo California companies to move eastward.

"It's not going to affect us a lot," said Tim Rubald, executive director of the Nevada Commission on Economic Development. "We're still going to be a lot less than California."

Molasky-Arman noted that Nevada remains competitive because its workers compensation premiums are capped at $36,000 per employee each year. Other states, she said, use the full payroll to calculate workers compensation premiums, and this means that premiums rise along with wages.

On the other hand, she said, insurers in states such as Nevada that place a cap on premiums are pinched when costs for medical care and other expenses rise. Because they can't recoup these higher costs by the natural rise of premiums with growing payrolls, the loss costs calculated by the National Council on Compensation Insurance need to be higher.