Virginia Employers Set for Seventh Straight Year of Rate Cuts
- The National Council on Compensation Insurance has proposed cutting Virginia’s workers’ compensation base rates by 5.6% for most employers next year, the seventh consecutive annual decline.
- The council attributed the decline to Virginia’s generally falling lost-time claim frequency, stable wage-replacement costs, and a significant drop in medical costs since 2016, which it linked to the state’s 2018 medical fee schedule. Medical claims payouts have fallen from over 100% of premium income before 2018 to 60.8 cents per premium dollar, with total medical and lost-time claims down 10% in 2024.
- Base rates for the assigned risk pool, which covers employers who struggle to find coverage due to their claims history, would decline 8.2% under the proposal; Virginia employers already pay the second-lowest average workers’ comp premiums in the nation at 54 cents per $100 of payroll, behind only Delaware.
- The State Corporation Commission is reviewing the filing and if approved, the new rates take effect in April.
Hawaii Shifts to Risk-Based Examination Model for Captive Insurers
- Hawaii Governor Josh Green has signed new legislation that will introduce a more risk-based approach to financial examinations of captive insurance companies, a structure many businesses use to self-insure their own workers’ compensation exposure.
- Under the revised framework, create by Senate Bill 2043, each captive (other than risk retention captives) must still be examined within five years of licensure, but subsequent examinations through Dec. 31, 2031 will be conducted at the insurance commissioner’s discretion based on each captive’s individual risk profile, rather than on a fixed schedule. The statutory five-year cycle resumes automatically starting January 1, 2032 unless changed by future legislation.
- The law requires the insurance commissioner to report to the legislature by early 2031 evaluating whether the discretionary approach adequately protects policyholders, and recommending whether to continue, modify, or repeal the framework. Senate Bill 2043 takes effect July 1.