(HELENA) Many Montana businesses will see a reduction in their workers’ compensation insurance costs, after Montana State Fund announced its rate changes for the next year.
On Friday, the State Fund’s board of directors approved an average 8.6 percent reduction in premium costs. The new rates will take effect July 1.
This is the 13th consecutive year the State Fund’s average rates went down or remained the same. President and CEO Laurence Hubbard said the rates are now about 60 percent lower than they were in 2007 – and the lowest since the fund was created in 1990.
“That’s good news for Montana businesses and Montana employees of those businesses,” he said.
The State Fund provides workers’ compensation insurance for about 25,000 businesses and other organizations in Montana. Leaders say lower premiums mean savings that employers can invest back into their businesses.
This year’s reduction comes after the National Council on Compensation Insurance proposed a 17.2 percent average decrease in loss costs, which reflect the expected costs to cover future claims and which the State Fund and private insurers use to help set premiums. State Auditor Matt Rosendale’s office approved the lower loss costs earlier this year.
Hubbard said lower loss costs are linked to improved workplace safety in Montana, with fewer accidents happening and those that do occur being less severe.
“We need to keep up the education and pressure, though, on getting accident frequency down, because Montana still has one of the highest rate of injury of any state in the nation,” he said. “So there’s room to improve, but this is a good sign of a continued trend of decreased accident frequency.”
Hubbard said they are hoping to continue these trends into the future, but they are monitoring some changes in the state’s workforce that could affect the outlook.
“We have an aging workforce, and older workers are staying in the marketplace longer,” he said. “Also, the new workers coming into the workforce are at higher risk of accident because they don’t have the degree of training and experience. So there’s a potential that this decline in accident frequency could flatten out. We’re hopeful that it will not.”
Hubbard also said inflation, particularly in medical costs, could lead to higher rates in the future.
In a statement released by the State Fund, Gov. Steve Bullock said this year’s rate reduction is a good sign for the state.
“I’m pleased to see a continued focus between public and private sectors on improving workplace safety in Montana,” he said. “As a result, both employers and employees benefit. We are improving outcomes for Montana workers, while businesses get to keep more of their hard-earned dollars to help them grow and create more good-paying jobs.”
Rosendale, Montana’s insurance commissioner, said in a statement that the rate reduction was good news, but he believes it could have been even large if not for a $28 million fee the state charged on the fund to help fill a budget shortfall during the 2017 special legislative session.
“I’m pleased to see a reduction in the State Fund’s rates after I approved the biggest loss costs decrease in eight years,” he said. “Unfortunately, this rate reduction is not as big as it likely should be because of the $28 million that was redirected from the State Fund last year. Any decrease in work comp insurance rates is good for Montana’s small businesses, so I’m happy to see rates continuing to decline.”