The approval of an 11.9 percent average decline in workers' compensation insurance premiums for 1997 by Insurance Commissioner Robert Wilcox is good news for Utah employers, but it could cause additional problems for the Employers Reinsurance Fund.
This is the third consecutive year for a decrease because employers are paying 10.1 percent less this year than they did in 1995; in 1995 they paid 8.2 percent less than they did in 1994.A decrease in the workers' compensation insurance premiums was recommended by the National Commission on Compensation Insurance. This year employers paid $296 million in workers' compensation insurance premiums, which will decrease to less than $200 million in 1997.
Lane Summerhays, president of the Workers Compensation Fund of Utah, a quasi public/private agency and the largest workers' compensation insurance provider in the state, said the decrease is good for employers and is the result of safety programs instituted in Utah businesses and managed health-care programs.
The ERF has about 1,500 permanently and totally disabled injured workers on its rolls who are paid wages and medical benefits. The Legislature passed a bill that made employers liable for payment of wages and medical benefits to permanently and totally disabled workers injured after July 1, 1994, but the ERF still has a huge liability to care for those either on the rolls or those who will go on the rolls for injuries suffered before July 1, 1994.
As a result of the decreased insurance premiums, the money that goes to the ERF and the Uninsured Employers Fund also will decline unless the percentage of the assessment is increased.
Recently, the State Industrial Commission increased the assessment to the ERF from 5 percent to 7.25 percent, the maximum allowed by law, that will apply to workers' compensation insurance premiums paid in 1997.
Also, the commission's Workers Compensation Advisory Council recently voted to ask the commission for an increase in the assessment to the two funds to a maxi-mum of 9.5 percent that will give the commission more flexibility in keeping the two funds actuarily sound.
Summerhays, a member of the advisory council, said the recommendation by the council was prudent to keep the funds in good financial condition.