Workers comp rates down since 2005 law

The workers compensation changes enacted by the Missouri Legislature in 2005 were sought by Gov. Matt Blunt as a way to make the state friendlier to business. A little more than two years after the bill was enacted, insurance rates paid by businesses are down and insurance companies are paying substantially less to workers who claim on-the-job injuries.

Labor leaders, however, remain adamant that the law adds insult to those injuries through provisions that make it tougher to prove that an injury is job-related.

When Blunt was elected in 2004, the state was in the fourth consecutive year of rising workers compensation rates. Rates, on average, went up by 14.7 percent in 2003.

Those increases followed six consecutive years of falling rates, and costs were already moderating during the election year with an average 2 percent increase.

Rates began falling again before the new law took effect, according to figures from the Misssouri Department of Insurance, Financial Institutions and Professional Registration. And rates in 2007 are about where they were in 1994, the year after the last major overhaul of workers compensation laws.

Rates for other types of property and casualty insurance are also falling, making the hunt for the cause of falling rates difficult, said Emily Kampeter, spokeswoman for the department. "Right now we can't say the changes have had a direct effect," she said.

In 2004, insurance companies collected $963.5 million in premiums and paid out $593.7 million in claims, according to insurance department figures. Last year, total premiums increased by $39 million to just more than $1 billion, while claim payments fell by $51.5 million to $542.2 million.

There are several factors pushing rates down, some related to the 2005 law and some the result of market forces, said Steve Millikan, vice president of public affairs for Missouri Employers Mutual Insurance Company. The company was formed by the 1993 law to make sure affordable workers compensation insurance was available to every employer in the state.

Millikan's company cut rates by 5 percent at the beginning of 2006 based on the company's claims experience and in anticipation of lower costs because of the 2005 law. Rates are falling in the market as a whole because of the law and also because several companies have either entered the Missouri market or are seeking a bigger market share, he said.

A final factor, he said, is that insurance companies are enjoying a greater return on their invested reserves, taking pressure off premiums as a source of profits.

"It is a combination of things," Millikan said. "Employers in Missouri are benefitting from the law changes and the pricing is going down in a competitive market and probably will continue to go down through 2008 or 2009."

Balancing responsibility

Workers compensation laws were enacted in the 1920s to create a way to avoid lawsuits over worker injuries. The system attempts to balance the responsibility of workers to be careful with requirements that employers care for workers injured whiled doing their jobs.

The 2005 law adjusted that balance by taking away a legal bias in favor of workers when facts are in doubt, requiring workers to prove that their jobs were the primary cause of their injury and by cutting benefits when workers have drugs or alcohol in their system at the time of an accident.

"From our perspective, overall it seems a much more fair system, and I have not heard any serious grumblings," said Gary Marble, president of the Associated Industries of Missouri.

The change taking away the favoritism toward workers and raising the standard for proving employer liability helps employers by protecting them from workers who sustain injuries outside the workplace that may be aggravated, but not caused, by their work, Marble said. "The key term that has been used, and the term continues to float to the top, is that workers compensation is the insurer of last resort," he said. "If an employer does not have health insurance and a worker is injured, who is going to pay?"

Two-thirds of the injuries reported to the Missouri Division of Workers Compensation require only medical treatment and do not result in days lost from work, said Tammy Kavender, spokeswoman for the division. There were 130,000 injuries reported in 2006, she said.

The majority of those injury claims are not contested, Kavender said.

The characterization that workers are deliberately trying to force employers to pay for non-work related injuries is a smokescreen to divert attention from an attack on workers rights, said Herb Johnson, secretary-treasurer of the Missouri AFL-CIO. "We are talking about taxpaying citizens, injured people who pay taxes who are citizens of our state in every walk of life being denied health care because they were hurt at work," Johnson said.

The 1993 changes were a negotiated compromise, again in response to an insurance market with soaring rates squeezing business. The 2005 workers compensation law showed business lobbyists using their power in a friendly, Republican-dominated legislature to enact changes that did not balance competing interests, Johnson said. Businesses and insurance companies would do away with workers compensation if it weren't for the certainty they would be in court fights with injured workers, he said.

"So what do they do? They hollow it out so it is virtually worthless and the injured person has nowhere to go," he said.

Labor groups have learned a lesson in hardcore politics, Johnson said. "If you stick it to me when you have the power, what am I going to do when I get that power? That doesn't benefit the state as a whole."

rkeller@semissourian.com

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