Delaware is set to reduce voluntary market workers' compensation rates by 8.4% and residual market rates by 9.21%, effective Dec. 1, according to the Delaware Department of Insurance.
According to a report, the cuts are attributed to a decline in claims frequency and a continued emphasis on workplace safety programs.
This marks the eighth consecutive year that workers' compensation rates in the state have dropped. The reductions surpass the initial request from the Delaware Compensation Rating Bureau Inc. (DCRB), which proposed a 4.83% decrease in residual market rates and a 3.98% reduction in the voluntary market.
Over the past decade, claims frequency has dropped by an average of 5.6% annually, the DCRB reported. In policy year 2022, claims frequency fell by 4.9%, continuing the downward trend seen in seven of the past 10 years.
This trend is reflective of broader industry shifts, according to AM Best senior industry analyst Christopher Graham. He noted that advancements in technology and medical treatment have contributed to safer workplaces and shorter return-to-work timelines.
The Delaware Department of Insurance also highlighted the significance of the steeper rate reduction in the residual market, where companies previously forced to purchase coverage from the insurer of last resort are now increasingly able to find coverage in the voluntary market.
This is the third consecutive year residual market rates have decreased, signaling improvement in both coverage affordability and employee safety.
Historically, Delaware ranked among the states with the highest workers' compensation costs. Insurance Commissioner Trinidad Navarro (pictured above) credited the continued rate decreases to the state’s Workplace Safety Program, which incentivizes companies to enhance their safety practices.
“These consecutive and significant reductions prompted us to work with partners to amend the premium threshold at which companies can receive additional premium discounts through participation in our Workplace Safety Program,” Navarro stated.
In 2023, nearly 1,000 businesses in Delaware saved a combined $5.6 million by participating in the Workplace Safety Program, which offers up to a 19% discount on workers' compensation premiums for companies that complete annual safety inspections and follow recommendations.
Legislation passed earlier this year is expected to expand the program, making around 2,120 additional businesses eligible for participation.
Earlier this week, the Idaho Department of Insurance approved its own reduction in workers' comp, marking its eighth consecutive year of implementing declining rates for the sector.
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