After reviewing a 5.3 percent increase request for workmen's compensation insurance premiums in Utah requested by the National Council on Compensation Insurance, Insurance Commissioner Harold C. Yancey has approved a 3 percent increase effective Jan. 1, 1989.
Yancey said the expense portion of the filing (commissions, operating expenses, etc.) wasn't found to be appropriately documented or justified. He said the expense factors were overstated by at least 2.3 percent.Also, the average rate increase in the contracting classification over last year's rates was significantly higher, hitting a Utah industry that can least afford the increase, he said.
Blaine Palmer, director of the State Insurance Fund (Workmen's Compensation Fund), said he wouldn't argue with Yancey's decision, but thinks the premium increase should have been higher.
Yancey said he is sensitive to rapidly increasing medical costs and feels the increase for that purpose was appropriately documented and justified. "Private carriers writing this line of insurance in the state, as well at the Workers Compensation Fund of Utah, are encouraged to maximize use of the latest technology to reduce acquisition and operating expenses to the lowest possible cost," Yancey said.
Palmer said medical costs have increased 17 percent each year in the last two years and are projected to increase 21 percent in 1989. He said 60 percent of the $67 million paid out this year in workmen's compensation benefits went to medical costs and 40 percent went to cover the time a person is off work because of an injury.
In 1988, the fund received $65 million in workmen's compensation insurance premiums from 21,000 companies paying into the fund, but $67 million was paid out to cover injured workers.