Legislative leaders are speaking out against a 40 percent increase in workers’ compensation rates, saying it would handicap businesses trying to recover from the economic recession.
"Approving another large rate increase would have devastating effects on Delaware businesses and could force companies into difficult positions about retaining jobs or even remaining open," House Democrats say.
House Speaker Pete Schwartzkopf, D-Rehoboth Beach, was one of three Democratic representatives to sign an Oct. 9 letter to Insurance Commissioner Karen Weldin Stewart, asking her to reject a recommendation from the compensation rating bureau to increase workers’ compensation rates by double digits.
“In the past two years, your office has approved rate increases totaling 26 percent – a total that has already put a strain on businesses struggling to keep their doors open as our economy slowly recovers,” the letter says.
Workers’ compensation insurance is required for many Delaware businesses to provide a safety net for employees who suffer on-the-job injuries.
In January, Weldin Stewart approved a 14.6 percent increase in premiums for regular, or voluntary market, customers and a 19 percent increase for residual market customers – those who have been rejected by voluntary market insurers.
The state approved an 11 percent increase in average workers’ compensation rates in 2011.
Delaware Compensation Rating Bureau filed its 2014 recommendation Sept. 24. In its filing, the bureau called for market rate increases of 39.5 percent and 42.75 percent.
In its filing, the bureau admits 40 percent is a significant increase but also states the current rate is not enough to fund workers’ compensation insurance in the state.
The bureau recommends Delaware agencies, including the Workers' Compensation Task Force, the Heath Care Advisory Panel and the Delaware Insurance Department, should continue to investigate the growth in claims and medical cost containment.
The bureau says if changes to the workers’ compensation system to cut costs and claims are implemented before the bureau’s filing for 2015, it would offer an alternative overall average increase of 17 percent in the voluntary market and 14 percent in the residual market, effective Sunday, Dec. 1, on a new and renewal basis.
Schwartzkopf, House Majority Leader Valerie Longhurst, D-Bear, and House Majority Whip John Viola, D-Newark, say any further increase is too much. “Even the alternative rate recommendation of 17 percent is far too burdensome and damaging to businesses,” legislators wrote.
Gov. Jack Markell signed a bill into law June 27, lowering inflation for certain medical costs associated with workers’ compensation insurance. House Bill 175 also sought to ensure injured employees were being given job opportunities they could fulfill until they were healed.
“The bureau has indicated that these actions lowered costs by a nominal amount,” legislators wrote. “We strenuously dispute that notion and hope that the two actuaries who will independently study this filing will agree with us.”
Schwartzkopf, Longhurst and Viola also said the commissioner should postpone any action until the Affordable Care Act is implemented, which is expected to provide coverage options to previously uninsured workers.
If Weldin Stewart approves the rating bureau’s most recent recommendation, it would go into effect Sunday, Dec. 1.
Public information sessions on the filing are scheduled in all three Delaware counties, including a session at 7 p.m., Tuesday, Oct. 22 at Delaware Technical Community College Theater Auditorium in Georgetown. According to the Department of Insurance website, a public hearing to discuss the increase will be scheduled at a later date.