The National Council on Compensation Insurance (NCCI) has proposed a 9.1% reduction in workers' compensation loss costs for West Virginia, according to a statement from Gov. Jim Justice's office.
The recommended decrease would apply to all standard classifications, with a 10.4% reduction suggested for the assigned risk market. Loss costs serve as a baseline variable used in calculating workers' compensation premiums for businesses.
According to AM Best, this recommendation marks the 20th consecutive year of reductions in West Virginia's baseline workers' compensation rates. The proposed rate cuts are expected to lower insurance costs for businesses by approximately $15 million.
West Virginia Insurance Commissioner Allan L McVey cited a decline in claims costs as a primary factor behind the continued decrease in rates.
McVey noted that the state's average cost per claim has consistently been lower than both national and regional averages, with losses declining by more than 20% between 2018 and 2022.
McVey also pointed to the strong performance of West Virginia's economy and rising wages as contributing factors. As wages have grown, premiums have been lifted even as losses have decreased, indicating to ratemakers that there is room for premiums to be reduced.
Workplace safety was highlighted as another significant factor in the declining rates. McVey emphasized that employers who maintain safe workplaces tend to have fewer claims, leading to lower costs, both in direct workers' compensation expenses and in the hidden indirect costs associated with substantial claims.
The governor's statement also credited the privatization of the workers' compensation market as a key driver of cost reductions. In 2005, West Virginia enacted legislation to shift to a private market, with the first private carriers beginning to write workers' compensation policies in 2008. Since then, businesses in the state have saved an estimated $481 million.
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