HELENA – A top Montana insurance official has approved a double-digit reduction in the state’s workers’ compensation costs.
The action is intended to decrease the amount insurers pay for claims, which will lead to overall cost reductions for employers, said Monica Lindeen, the state’s insurance commissioner.
“Cutting loss costs by 22.4 percent will lower premiums and could make the difference for small businesses looking to hire new workers and expand,” she said in a statement Tuesday.
The rate decrease is the product of the Legislature’s bipartisan compromise on the issue brokered last month, Lindeen said.
Finding a way to reduce worker’s compensation costs was one of the highest profile topics of the 2011 Legislative session and it was one of the few issues to be quickly resolved with a bipartisan compromise.
Lawmakers involved with the overhaul said it could cut premiums by 40 percent within three years by trimming benefits to workers and cutting costs in other areas.
Montana’s workers’ compensation premiums are the nation’s highest, Lindeen said. This move is designed to bring that expense down.
Lindeen doesn’t control the insurance premiums set by the Montana State Fund, the state’s largest workers’ compensation insurer. However, it is likely the state — and private insurers — will reduce premiums based on the announced rate reduction.
“We anticipate we will reduce our rate in the range of 15-20 percent,” said Mary Barry, chief financial officer for the Montana State Fund.
Last month, Republican lawmakers and the Democratic governor’s office reached an agreement to reduce workers’ compensation insurance rates.
Many of the impacts of the Legislative cost reductions have yet to be implemented.
The State Fund’s board of directors plans to meet May 20 to discuss and implement changes.