From the historic hallways of the most beautiful state Capitol in our nation, this is Senator Keith Ingram.
A lot of factors drive the cost of workers’ compensation insurance. Inflation in the health care industry, particular the rising costs of pharmaceutical drugs.
Last year, of course, the Covid-19 pandemic was a major factor affecting the number of workers’ comp claims.
According to the annual report submitted to the legislature by the state Workers’ Compensation Commission, the Covid-19 virus accounted for about 45,000 claims.
The average claim amounted to more than $6,000, and in total they cost the system about $260 million.
The majority of those claims – about 75 percent – were for lost time. Most of those were filed by workers in health care and emergency response, such as nursing home staff, nurses, first responders and people who work in convalescent homes.
Even during the pandemic and economic recovery, the market for workers’ comp insurance in Arkansas is competitive. That’s due in large part to measures approved by the legislature and state government.
During the regular session earlier this year we approved Act 353, which allows workers to file a claim for workers’ comp benefits if they contracted the virus while at work.
Act 353 will remain in effect until May 1, 2023.
Many business leaders believe that the Arkansas market for workers’ comp insurance would have disappeared, had it not been for Act 796 of 1993.
Before passage of the law, rates for workers’ comp insurance were going up by double digits every year and many employers could not afford to pay for workers’ comp insurance.
But in the years after Act 796 became law, rates stabilized and in some years the rates even went down.
This year rates in the voluntary market are down 1.1 percent, and in the assigned risk plan they’re down 1.6 percent.
The assigned risk pool covers workers in companies that cannot provide insurance, for a variety of reasons. For example, the rates may be extremely high because of the dangerous nature of the job.
Generally speaking, businesses prefer to purchase their workers’ comp insurance through the voluntary market, because of its lower rates.
Until the legislature passed Act 796, the assigned risk pool had been gaining in market share until the amount of premiums set a record in 1993 of about $150 million.
Today, it’s down to about $22 million.
Those statistics don’t get a lot of publicity, but you can ask anyone who owns a business and they’ll tell you how important it is to have stability in workers’ comp rates.
Arkansas has the lowest workers’ comp costs in the region, based on every $100 of payroll.
That’s the kind of information that industrial recruiters are quick to point out when they’re trying to persuade corporate executives to locate in Arkansas.
In other words, a safe work environment helps employees by keeping them out of the hospital. It helps employers by holding down the cost of business.
And it helps economic development, which brings more jobs to the community.
From the Capitol, it is always my great honor and sincere privilege to serve you as your state Senator. This is Keith Ingram.