For New Mexico small businesses with the highest cost premiums in the workers’ compensation system, a glimmer of good news: you might see a premium decrease next year.\u00a0 This is according to statistics presented last week by NCCI, the National Council on Compensation Insurance, the major source of data about workers’ compensation costs.<\/p>\n
Costs have declined by about 5 percent in the \u201cresidual market\u201d or Assigned Risk Pool, where you get your insurance if your business is so small or such a bad risk that no insurance company would voluntarily cover you. \u00a0The pool is automatically more expensive than the voluntary market. \u00a0This potential decrease could be a bit of relief from the regulatory and cost pressures that afflict small business.<\/p>\n
NCCI presented this information at its annual New Mexico Advisory Forum. \u00a0However, the good news on the Assigned Risk Pool is one of few bright spots.<\/p>\n
The other bright spot is the continued, though slowing, decrease in indemnity or lost-time claim frequency.\u00a0 In plain English, fewer workers are getting hurt.\u00a0 Most claims have always been \u201cmedical-only,\u201d involving relatively simple injuries paying only medical bills.\u00a0\u00a0 Indemnity claims, in which the worker gets a check for lost work time, are much more expensive.\u00a0\u00a0 The reduction in lost time claims has been dramatic over recent decades and is probably due to big improvements in safety.\u00a0\u00a0 But the rate of reduction is slowing, so it\u2019s not continuing to reduce costs.<\/p>\n
The really bad news is an increase in total loss costs of 7.4 percent for the New Mexico voluntary market.\u00a0 Based on this number, businesses can expect an increase in premiums next year (which will vary with specific industry trends and individual company performance).\u00a0 For workers, that means another drain on the employer\u2019s money and a little less job opportunity.<\/p>\n
We don\u2019t compare well to other states.\u00a0 Of the 38 states that use NCCI for these filings, 12 have decreasing costs and the rest are going up.\u00a0 The 7.4 percent for New Mexico is the fourth highest increase, and the highest in our region.\u00a0 Just what we needed to help the economic recovery.<\/p>\n
What\u2019s increasing costs is that lost time claims are costlier than in the past.\u00a0 Workers are off work for longer periods and the medical costs are higher.\u00a0 As a dramatic example, NCCI isolated the small number of claims that cost $500,000 or more.\u00a0 From 2003 – 2005, there were 13 such claims.\u00a0 From 2006 – 2008 there were 33 claims, and the total payments almost tripled, to $37.2 million or an an average of more than $1 million per claim. Small numbers, big bucks.\u00a0\u00a0 Were these workers more seriously injured than those in the past?\u00a0 I doubt it.\u00a0 Something systemic has changed.<\/p>\n
This trend is likely to continue not only because of problems in the workers’ compensation law, which are massive, but possibly also because the system relies on returning injured workers to their pre-injury employers, and in today\u2019s economy that\u2019s harder for employers to do. The worker who can\u2019t do his job efficiently due to injury is more of a liability when the employer is competing harder to stay in business.<\/p>\n
NCCI usually stays primly on the statistical analysis side and doesn\u2019t give moral conclusions.\u00a0 But I do.\u00a0 New Mexico is well past the time when we could pat ourselves on the back for a reform that is more than 20 years old and, bluntly, now obsolete. \u00a0We need to fix this system again.\u00a0 To do that, we need a new generation of business and political leaders who care about the numbers and the nitty gritty policy details, and also care about the human beings they represent.<\/p>\n
\u00a0\u00a0 <\/em>Triple Spaced Again, \u00a9 New Mexico News Services 2011<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" For New Mexico small businesses with the highest cost premiums in the workers’ compensation system, a glimmer of good news: you might see a premium decrease next year.\u00a0 This is according to statistics presented last week by NCCI, the National … Continue reading