Committee advances targeted change to workers' compensation rating process to curb inflated premiums

Sponsors told the House Business & Labor Committee that Senate Bill 175 is a narrow, administrative fix to a technical problem in the workers' compensation rating system: when carriers report high reserve estimates for open claims, those estimates can remain on an employer's record for a full year even if the claim closes much lower, which inflates the employer's experience modification factor and premiums.

Rep. Morrow, a sponsor, said the change would "allow within 31 days of a change to notify the carrier that a claim is closed out at a lower rate" and targeted those cases where the adjustment materially affects an employer's modifier. Industry advocates and insurance experts testified in support. Sonia Gunther, an insurance professional with decades of experience, explained how an initial $85,000 reserve later closed at $20,000 can nonetheless leave the higher figure on the employer's record and disproportionately raise premiums. Chad Mathis and Michael Gifford echoed that the proposal is a focused remedy already adopted in several other states.

Committee members asked about recourse if carriers or rating bureaus fail to process requests on time. Witnesses said remedies follow existing administrative paths, involve the insurer and NCCI (the rating organization), and that the Division of Insurance and Division of Workers' Compensation would be the oversight channels for enforcement concerns.

The committee moved SB175 to the Committee of the Whole with a unanimous favorable recommendation (13-0). The sponsors characterized the bill as a common-sense fix to avoid unintended premium increases and to preserve bidding eligibility for small and midsize employers.