Insurance Commissioner Karen Weldin Stewart Announces
Substantial Decreases in Workers’ Compensation Rates

Expected Savings for Employers May Reach $20 million

DOVER, DE  – Insurance Commissioner Karen Weldin Stewart today approved the Delaware Compensation Rating Bureau’s workers’ compensation amended rate filing, resulting in overall average decreases of 9.7% in the residual market rate and 11.5% in the voluntary market loss cost.

The decreases are the result of cooperation among the DCRB, the Department of Insurance and Delaware’s Ratepayer Advocate, and are expected to save employers approximately $20 million in insurance costs this year.

“After several years of rate increases, I am pleased to announce a decrease in the premium most business owners will pay this year when purchasing workers’ compensation insurance,” said Commissioner Stewart. “As I said when the preliminary numbers were released in the fall, the decrease is the result of all the stakeholders working together to bring down Delaware’s high health care costs, which have been driving rates up over recent years.

“I want to thank the General Assembly for passing House Bill 373 last session, requiring that medical costs be reduced over the next three years.  I particularly want to thank my fellow members of the Governor’s Workers Compensation Oversight Panel, including Chair Rich Heffron, and Attorney General Matt Denn, past Chair of Workers’ Compensation Task Force, for doing the hard work that laid the foundation for HB 373.”

The effective date of the decrease is retroactive to December 1, 2014 for new and renewal business.

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Learn how your business could save up to 19% on workers’ compensation insurance premiums by participating in the Delaware Workplace Safety Program. Learn more about the program by visiting http://delawareinsurance.gov/services/workplacesafetydiscount.shtml, or call 302-674-7377.

Delaware Department of Insurance: “Protecting Delawareans through regulation and
education while providing oversight of the insurance industry to best serve the public.”

Commissioner Schedules Workers’ Compensation Rate Hearing

Decreases in rates supported by independent actuaries

DOVER, DE – Insurance Commissioner Karen Weldin Stewart announced today that the Department of Insurance has scheduled a public hearing for January 12 and 13, 2015, to receive public comment on proposed rate decreases for Workers’ Compensation insurance for the upcoming year.

Commissioner Stewart has received filings from Milliman, Inc. and INS Consultants, Inc., two independent actuaries engaged by the DOI, and by a third independent actuary, AIS Risk Consultants, working for Delaware’s Ratepayer Advocate. All agree that an overall reduction in both residual market rates and in voluntary market loss costs, as proposed by the Delaware Compensation Rating Bureau under Filing No. 1404, is in order. All documents are available on the DOI website at www.delawareinsurance.gov

Public hearings on the filings are scheduled for Monday and Tuesday, January 12 and 13, at 9:30 a.m. in the Carvel State Office Building at 9^th and French Streets in Wilmington. January 12 will be reserved for the receipt of oral comments from members of the public, and January 13 will be reserved for the introduction of evidence by the parties to the proceeding. If all parties agree, introduction of evidence by the parties may begin on the first day.

Public comment may be in writing or may be presented orally at the Hearing. Written comments must be received no later than Monday, January 5, 2015 by 4:30 p.m., and should be addressed to the attention of Nicole Holecek, Paralegal, Delaware Department of Insurance, 841 Silver Lake Boulevard, Dover, DE 19904. Also, those intending to provide oral comments at the hearing must notify Nicole Holecek at 302.674.7316 or Nicole.Holecek@delaware.gov, no later than 4:30 p.m., Monday, January 5, 2015.

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For more info contact Jerry Grant at 302-674-7303

Preliminary Workers’ Compensation Rates Indicate Decrease

Commissioner Stewart will review actuaries’ filings

DOVER, DE–The Delaware Department of Insurance is in receipt of Delaware Compensation Rating Bureau filing No. 1404, which indicates a decrease in both the voluntary loss cost and residual market rate for workers’ compensation insurance for 2015. Commissioner Karen Weldin Stewart is encouraged that DCRB’s initial indicated rates reflect a decrease.  The Commissioner has hired two independent actuaries to review the filing along with the Ratepayer Advocate’s independent actuary.

“If this potential decrease becomes a reality, it will be as a result of all the stakeholders working together to bring down the health care costs which have been driving workers compensation rates up over recent years,” said Commissioner Stewart. “I applaud the members of the General Assembly for passing House Bill 373, which mandates that medical costs be reduced by 33 percent over a three year period. I also congratulate my fellow members of the Governor’s Workers Compensation Oversight Panel for doing the hard work and research that was the foundation of HB 373.  Without the caps imposed on hospital fees by that legislation, I feel we would be facing rate increases in the neighborhood of 26 to 30 percent.”

The complete DCRB filing may be accessed by going to: http://www.dcrb.com/dcrb/filings/1404/d_filing_1404.htm

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For more information, contact Jerry Grant at 302-674-7303.

www.delawareinsurance.gov

Submitted pursuant to House Bill 175, 147th General Assembly

DOVER, Del. – This afternoon, Lt. Governor Denn, Chair of Delaware’s Workers’ Compensation Task Force, and business and legislative leaders made recommendations to Governor Markell and the General Assembly to stop the large workers compensation rate increases that are burdening Delaware businesses.

Governor Markell said of today’s report and recommendations, “I applaud the Lt. Governor’s work on this extremely important issue for Delaware’s business community. His leadership ensured that the task force acted swiftly and effectively to address the high rates that have burdened our employers. The bipartisan reform package outlined today represents the culmination of a great deal of work, commitment and compromise by everyone involved with the task force.”

The Workers’ Compensation Task Force was created on January 30, 2013 by the Delaware General Assembly and the Governor, and charged with an expedited review of Delaware law relating to workers’ compensation, the impact that the 2007 amendments to that law had upon workers’ compensation premiums, the reasons for recent increases in workers’ compensation premiums, and whether any additional changes to statutes, regulations, or practices are required to control growth in premiums. As detailed in the task force’s prior report, Delaware’s workers’ compensation premiums had risen by calendar year 2006 to be the third most expensive in the country. The primary reason for Delaware’s high premiums was generally agreed to be medical costs – the Delaware Compensation Rating Bureau (DCRB) indicated that in 2006, medical costs were 60% of total workers compensation system costs in Delaware, as compared to 40% in surrounding states.

The task force delivered its first set of recommendations in May 2013, and those recommendations were consolidated into House Bill 175 which passed the Delaware House of Representatives and Delaware State Senate unanimously. Among the provisions of House Bill 175 was one that continued the existence of this task force through June 30, 2014.

The task force’s recommendations fall into three areas:

1. Heightened Oversight of Insurance Carriers. These recommendations include consolidating the Data Collection Committee and the Health Care Advisory Panel into a single committee and a Ratepayer Advocate to be hired and overseen by the Workers’ Compensation Oversight Panel, with staff support to be provided by the Department of Labor.

2. Stricter Control on Medical Costs. These recommendations include directing the Workers’ Compensation Oversight Panel to create a new medical fee schedule, using multipliers of medical codes used by the Centers for Medicare and Medicaid Services, which results in a 33% savings from all providers (to be phased in over a three year period) and recommending that the General Assembly (through the Workers’ Compensation Oversight Panel) monitor both the rate impact of these recommendations and their impact upon providers as the recommendations are phased in, and make statutory adjustments in the fee schedule if appropriate.

3. Consideration of New Rating Organization. The task force recommends that DOI undertake a formal assessment of whether there should be a change in the rating organization used by Delaware insurance carriers, and include members of the task force who have expressed concerns about the current situation in that formal assessment.

“Lt. Gov. Denn deserves much of the credit for this proposal, without his expertise and leadership we might still be struggling with this issue,” said Senate President Pro Tem Patricia Blevins, D-Elsmere. “It is our hope that this proposal will result in real savings to businesses that have been struggling with ever-skyrocketing workers’ compensation rate increases.”

State Representative Ruth Briggs King (R-Georgetown), a member of the task force, said, “This bill is the result of months of work with employers, health care providers and insurers. I believe a great deal of thought and consideration went into crafting this legislation, which I believe will help reduce the uncertainty and escalating premiums for Delaware’s small businesses.”

“I think we had an excellent group of task force members, committed to helping the business community, and I can’t thank them enough for all of their hard work,” said Senator Gerald Hocker (R-Ocean View), both a panel member and the owner of several Sussex County businesses. “It turned out to be a great idea to keep this task force together for another year, and I think the legislation that comes out of this effort is going to provide significant cost savings to the employers of the state of Delaware.”

“The members of the Worker’s Compensation Task Force have taken on the task of improving critical elements to Delaware’s competitiveness when it comes to job creation and business expansion,” said Rep. Bryon Short, D-Brandywine Hundred. “Through great effort, we have tackled one of the most important factors driving up workers compensation costs for Delaware’s employers. I believe the adoption of a relative value units-based fee schedule will have a meaningful impact on the premiums paid in Delaware. Our work is not done. Other important areas resulting in high premiums for Delaware businesses need to be examined in the coming year, and we will continue to look out for businesses and the workers they employ.”

“It was not easy to get to this point in making changes to the workers compensation payment system,” said Rich Heffron, President of the Delaware State Chamber of Commerce. “Through the dedication and hard work of my fellow Task Force members – along with Lt. Governor Denn’s leadership – today we are able to propose changes that can be expected to lower Delaware’s workers compensation rates. We still need to determine why Delaware’s cases take longer to settle, and how insurance companies calculate their reserves, but that is for a future Task Force to examine.”

A copy of the report is included, as are separate statements from the Delaware Compensation Rating Bureau, Medical Society of Delaware, and the Delaware Department of Insurance, included at their request.

Liberty Insurance Corp. and LMI Insurance Corp. Target 2014

Medical Society of Delaware’s May 9, 2014 Workers’ Comp Task Force Statement

Lt. Governor Denn’s DOI Workers’ Compensation Task Force Letter from May 12, 2014

DCRB Comments to May 14, 2014 Task Force Report

Workers Comp Report Presented May 15, 2014

Dover, DE-Delaware Insurance Commissioner Karen Weldin Stewart announces today that based on the agreement between the Delaware Department of Insurance, the Delaware Compensation Rating Bureau and the Ratepayer Advocate, she has approved the re-submission of the Delaware Compensation Rating Bureau (DCRB) workers’ compensation rate filing regarding the residual market rate and the voluntary market loss cost.

The annual filing was carefully reviewed and analyzed by the Delaware Insurance Department’s actuaries, as well as the Rate Payer Advocate’s actuary. The reports were posted on the Department’s website. The lower increases approved reflect a more appropriate balance in the cost of insurance premiums compared to the cost of the system. The Commissioner and the Rate Payer Advocate, along with their actuaries, concurred that the increases of 11.4% in residual market rates and 14% in voluntary market loss costs met the requirements in Delaware law that rates must not be inadequate, excessive, or unfairly discriminatory. The effective date of the increase is retroactive to December 1, 2013 for new and renewal business.

Commissioner Stewart stated “While three different actuaries have all concluded that an increase is indicated, I must weigh more than actuarial considerations in making my decision. The difficulties seen by Delaware employers as emphasized during the three public information sessions, the need for our economy to grow, and the rising costs faced by insurers must all be included in my final decision. This decision represents a savings of more than 45 million dollars to Delaware employers from the original submission. We encourage the DCRB and legislative leaders to continue to work toward a common goal of identifying and addressing the underlying cost drivers in Delaware’s workers’ compensation rates.” Stewart believes that continued momentum behind legislative reforms introduced in 2013 and those sought in 2014 to ensure that future rate requests are small will help to keep our economy strong and attract and retain businesses in Delaware. Stewart added “Unfortunately, a rate increase is necessary this year for worker’s compensation insurance in Delaware. My commitment to the consumer is unwavering; and I will continue to work with all parties to create further reform that we expect will result in a reduction in the overall cost drivers in the worker’s compensation system.”

For more information about the DCRB annual rate filings, visit the Delaware Department of Insurance website at www.delawareinsurance.gov.

Please see attached statement from the Rate Payer Advocate.
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Delaware Department of Insurance: “Protecting Delawareans through regulation and education while providing oversight of the insurance industry to best serve the public.”