The Department of Labor and Training announced today that it has cut the administrative assessment rate charged to insurance companies providing workers' compensation coverage in Rhode Island. For fiscal year 2015, DLT has reduced the rate to 6.65 percent from 6.75 percent of insurance companies' total net workers' comp premiums.
This is the first rate reduction since 2003. Based on the net premiums collected in FY 2014, a rate drop of one-tenths of a percentage point will save insurers about $250,000 from July 1, 2014, to June 30, 2015, according to DLT actuarial data.
State law gives the DLT Director the power and discretion to set workers' compensation assessment rates annually according to the fiscal year calendar. By law, DLT finances the entire workers' comp system using the "net assessable premium" formula described above. Workers' comp is a form of no-fault insurance designed to help employees injured at work pay for medical expenses and make up lost wages.
DLT Director Charles J. Fogarty made the decision after examining end-of-year financial records for the department's Workers' Compensation Division and projecting how much money it would need to cover its costs over the next fiscal year.
"Because of the improving economy and the effective administration of the workers' compensation system, we are able to pass along savings to the insurers who provide this very important coverage, which protects workers and companies equally," Fogarty said.
Workers' compensation premiums are based on payroll. As the Rhode Island economy has improved, more workers are on company payrolls, and therefore, the premium base has grown.
Among its many functions, the DLT Workers' Compensation Division:
Runs the system that protects injured workers, ensures that employers comply with the law and ensures that claims are paid correctly;
Compiles statistical information about injuries and costs;
Provides educational services with a goal of educating — not violating — employers;
Offers physical and vocational rehabilitation services for injured workers through its one-of-a-kind John E. Donley Rehabilitation Center on the East Side of Providence; and
Funds the fully independent Workers' Compensation Court system, headed by Chief Judge George E. Healy.