A higher incidence of claims combined with a new law will likely cause a double-digit rise in Missouri's workers' compensation rates next year, a new report suggests.

The National Council on Compensation Insurance (NCCI) says that, in addition to a 7.6-percentage increase in claims costs, rates will be impacted by a new law that shifts some type of injury claims from a “Second Injury Fund” to the main fund. NCCI estimates that the law will raise annual costs an additional 3 percent. Moreover, the new law allows state officials to impose an additional 3-percent surcharge on workers' comp premiums in 2014 to help replenish the Second Injury Fund.

All told, NCCI says a business could face a nearly 15-percent increase in costs related to workers' comp insurance if its individual rates follow the general NCCI cost projections. The actual premium costs will vary both by categories of business and by a particular business' claims history, according to NCCI.

Officials say that Missouri's projected cost increases are far larger than in most states, and they represent the highest increases since the state's 2005 reforms. Meanwhile, NCCI explains that although loss experience improved since the reforms, it has deteriorated over the past two years. The report indicates that Missouri is experiencing growth in both the number and size of large losses (defined as greater than $500,000), including growth in the number and size of large losses exceeding $3 million.

Lost time claims frequency has declined steadily in Missouri for years, but that decline has flattened in more recent years. Moreover, medical expenses make up 63 percent of the total benefit dollar, the report indicates. “Medical cost per case has increased considerably and does not show signs of abatement,” the report says. “In the past, declining claim frequency offset rising costs, however, this is no longer case.”

Special Reports /

Higher Claims, New Law Could Drive Double-Digit Percentage Increase in Missouri WC Rates

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