Missouri business owners can expect to see an increase in their MO workers compensation rates in 2014. The rates will likely increase by 11.6% in “loss costs” for anticipated 2014 claims. The National Council on Compensation Insurance (NCCI) filed the request with the Missouri Insurance Department on Aug 30th, 2013.
These are not formal rates for MO but are used by carriers to determine their rates for an upcoming year.
The NCCI attributes 7.6% of the proposed increase to the experience portion of loss costs. After showing steady improvements after reforms were passed in 2005, the loss experience in Missouri has been worse than expected for the past two years. An NCCI summary of its filing said the state is experiencing growth in both the number and size of large losses — those defined as greater than $500,000 — as well as growth in the number and size of large losses exceeding $3 million.
In regards to claims, medical costs contribute to 63% of the benefits paid out. Medical costs have increased drastically and do not show signs of decreasing any time soon. Indemnity claims only contribute to 37% of the costs. Brent Butler, the government affairs director at the Missouri Insurance Coalition, said ” Missouri remains the only state without a prescription drug monitoring system, the lack of which could lead to greater medical costs and insurance rates because the situation leaves Missouri insurers prone to abuse by opioid addicts.” This could be one explanation to the huge increase in medical claims for the state of Missouri.
Another reasons for the increase is due to Missouri’s troubled Second Injury Fund.
A law that took effect this year is meant to help bail out the strapped second injury fund by, shifting some of the claims from the fund to the worker’s compensation system.
The law also allows Missouri officials to increase a surcharge on workers compensation premiums from 3% to 6% in 2014 to go towards the second injury fund.
There has been an increase in the amount of claims that are $500,000 or more. Meaning that Missouri insurer’s have had to pay out a significant amount. The frequency of these large claims are more than what the second injury fund brings in. Which is part of the reason that the second injury fund is in trouble.
It is highly recommended that Missouri business owners review their policy’s in 2014 to ensure that they are getting the possible rates. With a projected 15% increase, you almost can not afford to not shop your policy. At Workers Compensation Shop.com, we’re experts at insurance and would be happy to provide your business with numerous Missouri workers compensation insurance quotes.