A settlement agreement between the North Carolina Department of Insurance and the North Carolina Rate Bureau, the organization that represents the state’s workers’ compensation insurance companies, will raise loss costs by 1.6 percent in the voluntary market.
The deal has the potential to save businesses up to an estimated $56.1 million over the requested increase. The Rate Bureau originally requested a 5.9 percent increase in both the voluntary and assigned risk markets. The assigned risk loss costs were settled at a 4.1 percent increase.
Loss costs cover claims and claim handling expenses as experienced by the insurance company and are applied as a percentage of payroll for the business policyholder. Insurance companies convert loss costs into rates by factoring in additional expenses incurred, such as profit, overhead and commissions.
The average rate for workers comp in the voluntary market is now estimated to be 2.57 percent of payroll. The new loss costs become effective on April 1, 2008.
Source: North Carolina Department of Insurance
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