Lower Rates is Good News for Employers

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April 14, 2009 - HEMIC

HONOLULU April 12, 2009 - Clearly these are challenging economic times. Employers are being squeezed from many directions. There is at least one bright spot for employers: the continuing decline of HEMIC’s workers’ compensation rates.

Bob Dove, CEO/President of HEMIC, reports that HEMIC’s composite (average) rate for the first quarter of 2009 was 57% lower than HEMIC’s corresponding rate six years ago. Said another way, in 2003 HEMIC policyholders would have paid 130% more for their workers’ comp insurance than they pay today. “The rate decreases are truly remarkable”, says Dove. “And the best news is that rates are down primarily because accident frequency is down.”

What is “frequency”? In first quarter 2003, HEMIC experienced 1.57 claims for every million dollars of earned payroll. In the first quarter of 2009, HEMIC had only .99 claims per million dollars of earned payroll. Claim frequency for the period is down 37%.

So who are the winners? Obviously, employers are winners. Rates are down. Workers’ compensation premiums are lower. There is more competition for your business. HEMIC policyholders have earned the lowest rates in HEMIC’s history. In addition, HEMIC has paid a dividend to qualifying policyholders in each of the last two years.

Workers are also big winners. As the frequency rate drops, fewer and fewer workers are exposed to the pain and suffering that on-the-job injuries represent. And workers deserve part of the credit for improved workplace safety. Dove emphasizes, “All the rules and programs in the world will be ineffective if workers ignore them. Hawaii’s workers deserve a lot of credit.”

How long will these bargain rates last? “That depends on a number of factors,” says Dove. The economy, investment markets, reinsurance rates, legislation, and a number of other factors beyond the control of employers and their workers all play a role. But workplace safety is where employers have a clear opportunity to influence future workers’ compensation rates. Safer work places lead to fewer injuries. Fewer injuries result in lower rates regardless of the factors that are beyond the employers’ control.

“Workplace safety is the responsibility of every employer and every worker. Concerned employers who effectively utilize loss prevention resources provided by HEMIC, HIOSH, and other sources are well on their way to creating a safer work place.

Dove concludes, “While workplace safety begins with the employer, all the programs and resources in the world won’t make a work place safer if employees ignore them or fail to utilize them effectively. It is a joint responsibility, and both employer and worker benefit when it is done well.”