Michigan Department of Licensing & Regulatory Affairs (LARA) Director Steven H. Hilfinger announced today good news for Michigan’s businesses as the pure premium advisory rates for workers’ compensation insurance will drop by an average of 7.2 percent.
This marks the second year in a row with a drop of over 7 percent.
“The decline in the state’s pure premium rate for workers’ compensation is great news for Michigan employers and ultimately employees and job seekers,” Hilfinger said. “By reducing costs, we are making Michigan even more competitive in attracting and retaining business in our state.”
Workers’ Compensation Agency Director Kevin Elsenheimer said the drop in average rates for 2012 is likely due in part to a reduced number of work-related injury claims as a result of well-developed safety programs and a fee schedule which controls medical costs for work-related injuries. Recently enacted reforms to Michigan’s workers’ compensation law have had a role.
“When the Governor signed PA 266 of 2011 reforming the state’s workers’ compensation system, there was a hope that costs would go down. Now we know that almost a third of this year’s pure premium reduction results from those changes,” Elsenheimer said.
The state’s quasi-public Data Collection Agency Board approved the 7.2 percent reduction in the average pure premium rate on July 25, 2012, to be effective January 1, 2013. The rate is the annual yardstick against which private insurance carriers can compare their rate structure for workers’ compensation coverage for the coming year.
The pure premium rates are developed by examining historical loss data reported by insurance carriers for individual job classes and then analyzing how the data will be affected on a year-to-year basis by any law changes or court decisions.