OKLAHOMA CITY (AP) -- The State Property and Casualty Board Thursday unanimously approved a 5.5% ncrease in a key component of workers' compensation rates.
The approved increase was about halfway between the 11.5% hike sought by an insurance industry group and the unchanged rate recommended by Attorney General Drew Edmondson. The Insurance Department's actuary recommended a 2% hike, and The State Chamber's expert called for a 9.4% increase.
"It is a number that is not totally satisfactory to any one of the parties involved in this action," Assistant Attorney General Lynn Rogers said. "That probably means that it's a fair compromise."
The increase in "loss cost" rates refers to the direct expense of settling workers' compensation claims like medical bills and salary reimbursements. The costs are about 70% of what a covered company pays.
Loss cost doesn't cover the insurance companies' administrative costs or profits. Proposed increases in those rates are filed individually with the Property and Casualty Board.
State businesses will see varying results after the new rates take effect Jan. 1. There are about 600 business classifications, and the 5.5% hike is an average of the changes for all of those classifications. Also, under Oklahoma law, the insurance companies' premiums can vary up to 15% from the approved rate.
The board last year rejected a request from the National Council on Compensation Insurance for a 6.5% increase in loss cost rates. In 2003, the board approved a 3.8% increase after voting for three consecutive decreases.
Board member John Marshall said a trend of rising medical costs associated with workers' compensation claims could prompt greater rate hikes in the future.
"We could have some problems in the next few years," Marshall said. "I don't want us to get to the point where we have to really consider huge increases."
Marshall said recent increases signal it's time for state policy-makers to enact new workers' compensation reforms.
Gov. Brad Henry has appointed a bipartisan group of industry experts to draft a reform proposal that will be considered by the Legislature next year. The group is examining workers' comp laws in the 10 states where premiums are lowest.