Comp premiums

NC maintains Middle-of-the-Pack Ranking

Twenty-one jurisdictions in the U.S. had lower workers’ compensation premium rates than North Carolina in 2022, according to a widely followed report from Oregon’s department of consumer and business affairs. Oregon releases its workers’ compensation premium rate rankings every two years.

North Carolina continues to maintain its middle-of-the-pack position – in 2020, 20 jurisdictions had lower rates, while eight years ago 24 states had lower premium rates than North Carolina. According to the most-recent report, South Carolina had higher premium rates than North Carolina in 2022, while Virginia, Tennessee, and Georgia had lower rates. Workers’ compensation premium rates tend to be lowest in North Dakota, West Virginia, and Arkansas, while rates tend to be highest in New Jersey, Hawaii, and California.

The national median index rate has fallen steadily over the last 25 years or so, from a high of $4.35 per $100 of payroll in 1994 to $1.27 per $100 of payroll in 2022. Oregon has analyzed workers’ compensation premium rates in all U.S. states and the District of Columbia since 1986, using a methodology that controls for interjurisdictional differences in industry compositions. The study compares premium rates for the same set of industry classes across all jurisdictions, after weighting by the industry payroll in Oregon, to arrive at a normalized premium index rate that reflects differences in premiums.

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As the report explains, there are many reasons why premium rates vary among jurisdictions: insurers’ administrative costs are constrained by regional market forces; taxes and assessments are imposed at different rates and use different bases; and accidents and illnesses occur at varying rates as natural and random processes.

Given that Oregon’s report is closely watched by other states interested in how their rates compare nationally, the report’s authors mention several caveats. Among them the fact that trends in workers’ compensation systems and insurance markets have resulted in declining differences in states’ rates. “A narrower rate distribution (decreasing difference between maximum and minimum values) makes rank values more volatile from one study to the next, making the numerical ranking less meaningful,” the report concludes.

Separately, on September 22, 2022, the North Carolina Rate Bureau filed for a decrease of 4.8% from loss costs approved effective April 1, 2022. By industry group, the changes are: Manufacturing 3.8% decrease; Contracting 5.7% decrease; Office & Clerical 5.9% decrease; Goods & Services 5.2% decrease; and Miscellaneous 3.7% decrease. The bureau notes that within each industry group, the change will vary from the average by classification depending upon the volume and character of the particular classification experience.

The most-recent rate filings in North Carolina are not reflected in the latest Oregon study. However, rates may have decreased in other jurisdictions as well, leaving North Carolina’s position largely unaffected.