OTHER NEWS
Workers compensation rates to increase for most
South Dakota employers

Workers compensation rates should increase in July 2010. The rates are being influenced by several very large claims in 2006; 2007 claims continue this trend. The five-year period used to develop the rates includes these two years and also drops off 2002, which was one of the lower years in terms of loss ratios. Also, medical cost inflation is a contributor to claim losses.

The 2010 rates as calculated by the National Council on Compensation Insurance (NCCI) have resulted in proposed rates at a 5.3 percent overall increase for the voluntary market and 8.3 percent increase for the assigned risk pool. The assigned risk pool includes employers that have not been able to find coverage in the open voluntary market. Rates for the individual employer may vary.

The South Dakota Insurance Division reviews the rates proposed by the NCCI each year with its own actuary. Usually, the division's actuarial calculation is close enough to NCCI that the NCCI rates are accepted; this year, the division rates are lower. The division has proposed rates at an increase of 3.5 percent for the voluntary market and a 4.9 percent increase for the assigned risk group. South Dakota ranks 16 out of 51 states, including Washington, D.C., in premium rate ranking.

Because of the disparity, a rate hearing will be scheduled to determine the final rates. If the rates are not settled by the billings for July 2010, a pending rate amount may be sent to employers with adjustments to be made when final rates are determined. Last year rates were increased an average of 3.5 percent for the voluntary market that includes a majority of employers and .6 percent for the assigned risk group.

Additionally, 2010 legislation addressed the use of out-of-state medical fee schedules. The statute requires that claims be reduced to the established schedule used by the state in question for its employees. Until now, billed charges were used to determine out-of-state payments. The statute further requires that employees be held harmless from provider balance billing. It is expected that this change will reduce claim payment amounts in the future.

For more information about workers' compensation rates, contact the South Dakota Division of Insurance at (605) 773-3563. Additional information for employers and those interested in workers' compensation can be found at www.state.sd.us/drr2/reg/insurance/index.html.