S.C. Gov. Sanford Appoints Task Force to Study Workers’ Comp

July 28, 2005

A 33 percent rate increase proposed by the National Council on Compensation Insurance has motivated Gov. Mark Sanford to form a task force to study the state’s workers’ compensation system. The task force will take a close look at medical costs and wages for employees injured on the job.

NCCI is an insurance industry group that helps South Carolina companies determine workers’ compensation rates in the state. In its rate increase request NCCI cited soaring medical costs, lawyer involvement in injury claims and slow settlement of cases as some of the many factors to push the rate higher in the state.

The state Consumer Affairs Department and private business advocates in South Carolina say the higher rates could be detrimental to small-business owners, have challenged NCCI’s proposal and are preparing to argue the issue before an administrative law judge.

Rates had been steady throughout the 1990s and even decreased in some years, but this is the third year for double-digit increases, Hana Williamson, a 15-year veteran of Consumer Affairs and a lawyer who handles insurance issues told the Myrtle Beach Sun-News.

Williamson said NCCI sought a 17.6 percent increase last year, but the Consumer Affairs Department successful challenged the number and it was trimmed to 11.4 percent. A year earlier, the increase was 17.5 percent.

Those figures are considered for “lost cost” and do not include what individual insurers add for their expenses.

The council claims its rates are justified.

“In 2002, we had the seventh-lowest workers’ compensation premiums in the nation,” Sanford said. “If this latest increase is carried out, we’ll be ranked among the top half of the states in what our businesses pay for workers’ compensation insurance.”
Sanford asked two members of his Cabinet–Commerce Secretary Bob Faith and Insurance Department Director Eleanor Kitzman–to coordinate the 11-member task force made up of big and small business leaders, insurance companies, doctors and lawyers.
“Keeping worker comp rates as low as possible is key to remaining competitive and we want to thoroughly understand the issue,” Faith said.

The Legislature already has addressed several issues to help improve the system, including upgraded computers, more money to hire extra staff at the commission and a designated state prosecutor to focus on insurance fraud, said Frank Knapp, chief executive of the South Carolina Small Business Chamber of Commerce.

Knapp said he’s skeptical of possible a conflict of interest the NCCI may have recommending rate increases since it represents the insurance industry. The NCCI analyzes rates for 40 states.

“That’s always something we have to be cognitive of that they are using good data and are impartial,” Kitzman told the Sun-News, who will appoint members an oversight committee to study the rating service.

Task force member Tim Timmons, who handles work force relations for the South Carolina Chamber of Commerce, said the issue is complex and it will take time to understand what’s driving the rates up.
“They (NCCI) seem to be doing a very logical, very thorough and a very good job of generating the numbers and explaining what the numbers mean,” Timmons said. “What actually caused it to jump that far?”

Gary Thibault, director of the South Carolina Workers’ Compensation Commission said he welcomes any improvements to the system.

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