Workers’ compensation rate drops

Michigan Department of Licensing & Regulatory Affairs (LARA) Director Steve Arwood announced today that pure premium advisory rates for workers’ compensation insurance will drop by an average of 8.3 percent in 2014. Michigan’s pure premium rate has dropped by more than 21 percent in just three years and was the only Midwestern state to have its rate decrease by more than seven percent in both 2012 and 2013.

“This sizeable decrease in workers’ compensation rates gives Michigan a real competitive edge over neighboring states in attracting and retaining businesses,” said Arwood. “Workers’ comp premiums are overhead costs. These savings can free up additional capital for companies to hire new employees and open additional facilities, or give them one more reason to move to Michigan.”

The pure premium is a key factor in determining a job provider’s overall expenses for workers’ compensation and is the portion of an employer’s insurance premium that pays for the anticipated claims costs for work-related injuries.

The independent Data Collection Agency Board develops and approves the annual rate by analyzing historical loss information combined with regulatory reforms.

In 2011, Governor Rick Snyder signed sweeping legislation reforming the state’s workers’ compensation system. These improvements included defining disability and post-injury earning capacity, and have played an underlying role in the reduction of costs for our employers. The changes stabilized the 100-year-old system, ensuring the promise of compensation for injured Michigan employees.

“With the help of these legislative reforms, the Workers’ Compensation Agency (WCA) has been squarely focused on containing costs for employers and protecting injured workers,” said WCA Director Kevin Elsenheimer. “We will continue to examine every aspect of our regulatory program to ensure our system supports growth for our business customers.”

The WCA’s emphasis on reducing costs for job providers has included the administering of a well-developed fee schedule which controls medical costs for work-related injuries.

The effective cost containment is in conjunction with the Reinventing Performance in Michigan (RPM) initiative, a metric-driven customer service model designed to cut the bureaucratic red tape that is stunting the growth of business. Through a reduction in forms and improvements in technology, the WCA will soon be announcing improvements in our processing times for business customers, giving them back the valuable time and money they need to succeed.

Michigan’s injured workers and their employers are governed by the Workers’ Disability Compensation Act. This Act was first adopted in 1912 and provides compensation to workers who suffer an injury on the job and protects employers’ liability. The mission of the WCA is to efficiently administer the Act and provide prompt, courteous and impartial service to all customers.

For more information about LARA, please visit
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