Connecticut workers’ compensation insurers are recommending an overall 6.1% reduction in loss costs in the voluntary market and a 6.2% overall reduction in the assigned risk market for next year.
If the recommendation is approved, it would mark the eleventh straight year loss costs have gone down in the state. The rate filing submitted to the Connecticut Insurance Department by the insurers’ National Council on Compensation Insurance (NCCI) anticipates an effective date of January 1, 2025.
The NCCI recommendations for 2025 are based on premium and loss experience as of year-end 2023 from policy years 2021 and 2022 and shows improved experience relative to the organization’s 2024 rate filing, which also recommended decreases.
According to NCCI’s filing, Connecticut’s lost-time claims saw a moderate decrease in the latest year, continuing what NCCI says has been a long-term trend. Despite a small increase for the medical loss ratio in the most recent policy year, NCCI said it expects the long-term pattern of decline in the medical loss ratios, as well as the indemnity loss ratios, to continue in 2025.
The proposed change to the assigned risk rates for 2025 reflects a decrease to assigned risk expenses and an increase to the assigned risk differential, NCCI said.
The 2025 loss cost filing continues the downward trend of recent years.
For 2024 for Connecticut, NCCI recommended and the insurance department approved an overall 9.8% reduction in loss costs in the voluntary market and a 10.5% overall reduction in the assigned risk market.
For 2023, the state allowed NCCI’s proposed overall average change of -3.0% to the voluntary loss costs and no change to the 2023 assigned risk rate level.
Workers’ compensation costs also fell in 2022. Voluntary loss costs went down 14.1%, while assigned risk rates fell 8.2%, upon NCCI’s recommendation.
Each workers compensation insurer must add other costs including commissions and taxes to the approved loss costs to compute the final workers’ compensation rates it intends to charge.
Employers unable to obtain coverage in the voluntary market can apply for coverage in the assigned risk market.
Countrywide, NCCI reports that the calendar year 2023 combined ratio for workers’ compensation was 86%, a sign of underwriting profitability, where the net written premium increased by 1%. Frequency has continued its long-term decline, while claim severity changes were moderate for 2023.
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