THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 8, 1994 TAG: 9407080631
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
LENGTH: Medium: 54 lines
An insurance-industry group, citing the impact of escalating health care costs, has asked state regulators to raise the base rate for Worker's Compensation coverage in Virginia by an average of 7 percent.
The National Council on Compensation Insurance, which gathers data for companies writing Worker's Compensation coverage, also filed with the Virginia State Corporation Commission for a 22 percent increase in rates for coverage in the assigned-risk market.
The assigned-risk market is often the last resort for higher-risk employers who cannot find coverage in the regular Worker's Compensation market.
The SCC has the power to approve the proposed rates in full, approve only a portion or cut existing rates. Any changes would take effect Jan. 1, 1995.
NCCI's latest rate application is the second under a partially deregulated process in Virginia that began last year. When the SCC considers applications for increases of regular Worker's Compensation coverage, it acts only on industrywide factors, such as the cost of paying and settling claims.
Under the new arrangement, an insurer is free to change those ingredients in its rates that cover administrative costs and profits.
This more flexible rate-making arrangement was an attempt by state insurance regulators to foster greater competition and make coverage more available to employers in the state. By law, most employers in Virginia are required to have Worker's Compensation coverage, which provides medical care, rehabilitation and partial wage replacement to persons injured on the job.
However, ``it is too soon to draw any conclusions'' about how well the new process is working, said Marie Kinietz, an NCCI spokeswoman in Richmond.
Although the increases sought by the NCCI would average 7 percent, they would vary widely among the 600 job classifications used to determine rates.
For office and clerical workers, the base rate would rise an average of 15.8 percent under the proposal, while the base rate for manufacturing employees would increase 7.5 percent, Kinietz said.
Any change in rates also would vary according to an employer's injury experience, she noted.
NCCI's application for a 22 percent increase in premiums for the assigned-risk market is an attempt to reduce the market's reliance on subsidies from the regular Worker's Compensation market, Kinietz said.
Each insurance company that provides coverage in the regular market must write a portion of assigned-risk business and share in the losses that insurers sustain from participation in their assigned-risk pool. by CNB