The Pennsylvania Insurance Commissioner announced on Friday the department approved two mid-year workers’ compensation filings that will result in a 14.74 percent reduction in overall loss costs, a factor in setting premiums for employers.
The new costs will take effect Jan. 1.
The Pennsylvania Compensation Rating Bureau, an independent bureau that helps set workers’ comp premiums in the commonwealth, submitted two interim filings this fall on loss costs. Loss costs are one of many factors that determine premiums for workers’ comp insurance.
One of the filings is an attempt to redress a data error the PCRB discovered in a filing that became effective last April 1.
When the PCRB conducted its last loss-cost review for April 1, it noticed a carrier had overstated its 2016 claims, according to Bill Taylor, president of the PRCB.
Taylor said it was a “significant amount” that “threw all the numbers off,” which resulted in average overall loss costs to be about 8.9 percent higher than they would have been.
Insurance Commissioner Jessica Altman said it was possible some businesses paid higher rates than they should have because of the error.
“Therefore, I am urging all workers’ comp insurers to determine as quickly as possible whether this is the case for any businesses they insure, and to reimburse any businesses which have over paid as a result of the November 2017 filing,” Altman said in a news release.
“The department continues gathering facts on what led to the earlier filing’s needing revision, to determine steps to minimize the possibility of this recurring, and whether any further department action is appropriate,” the release said.
“Workers’ comp insurance is vital to protect workers hurt on the job and make sure they get the medical care they need. At the same time, this is a cost for businesses, and that cost must be calculated with accurate information,” Altman said.
The National Federation of Independent Businesses state chapter applauded the Commissioner’s stance.
“If small-business owners paid more than they should have for workers’ comp insurance, it’s only fair that they get refunds,” Gordon Denlinger, state director of the NFIB, said in a statement.
The NFIB, which represents about 12,500 small businesses in Pennsylvania, said the error could have cost businesses in the state “tens of millions.”
“Even if the data error was unintentional, we hope the insurers will do the right thing for their small-business customers who were overcharged,” Denlinger said.
“Small businesses struggle with the cost of workers’ comp insurance and any overcharge makes the situation even worse,” he said. “That money should instead be going to recruit new employees, to build the business or buy new equipment.”
The PCRB’s other filing reflected the impact of a new law designed to reverse a decision last year by the Pennsylvania Supreme Court. In what is known as the Protz decision, the court struck down the use of impairment ratings evaluations, or IREs, which allowed employers to cap benefits to injured workers.