Recent Developments in Worker's Compensation

Worker's compensation is an incredibly important coverage that helps protect businessowner's and employees from accidents and injuries that happen on the job. This coverage and its specifics varies from state-to-state, but there are several changes that have been made on the national scale in recent years that are important to be aware of. The Insurance Information Institute has more information:

• National: According to A.M. Best, workers compensation premiums for 2010 dropped for the fifth consecutive year, declining 3.6 percent to $34.1 billion from $35.3billion in 2009, while the combined ratio, the percentage of each premium dollar spent on claims and expenses, rose to 118.1 percent, the highest since 2000 when the combined ratio was 121.0. This deterioration in profitability was driven by a continuous decrease in premiums as poor economic conditions reduced the number of people in the work force and intense competition for business reduced prices for coverage.

• A study by the National Academy of Social Insurance (NASI) released in August 2011 shows that workers compensation system payments for workers' medical care and cash benefits that help cover lost wages increased slightly by 0.4  percent in 2009, the latest available data, to $58.3 billion. The medical share of benefits fell for the first time in a decade but still made up half of total workers compensation benefits, at $28.9 billion, a drop of 1.1 percent since 2008. Wage replacement benefits grew by 1.9 percent. Employers' costs declined by 7.6 percent to $73.9 billion, the largest decrease in the last two decades, according to NASI. Per $100 of payroll, the basis for computing workers compensation, employer costs in 2009 were the lowest in the last 30 years, at $1.30, a 0.04 percent decrease from  the previous year. Cash benefits to workers per $100 of payroll rose 0.04 percent to $0.52.