MONTPELIER — The Scott administration is touting big reductions in workers’ compensation premiums in Vermont.

The administration announced last week that come April 1 when the new rates take effect, rates in the open competitive market for workers’ compensation insurance will have gone down by 11.6% on average. This is part of a downward trend, according to the administration, that’s seen workers’ compensation rates drop by a total of 30% since 2016.

Michael Pieciak, commissioner of the Department of Financial Regulation, said in an interview Friday that he attributes the decreases to three main factors.

“One, the work we’re doing at the Department of Financial Regulation when it comes to the rate review,” he said. “We have taken a new approach to how we review the rate, starting in 2017. We’ve been much more aggressive on matching actual experience to the amount of premium charged, and that’s resulted in decreases over the last four years.”

He said there was also a surcharge being applied to certain businesses and industries that wasn’t justified by the number and severity of claims being filed.

“When we looked at that, we found that the experience, again, wasn’t justifying the surcharge,” he said. “That was a direct 6.7% reduction in the rates in 2018.”

A third change applied to Vermont’s log haulers. They’re now in the same pool as contract truckers, said Pieciak.

“The log haulers had a very small number of operations in Vermont, they had no history of accidents, they had a very safe record, but because they were so small they had really high rates, because they had to rely on experience beyond Vermont,” said Pieciak. “So by combining them with the contract trucking code, which was very big in Vermont, they saw an immediate 24% reduction in their workers compensation rates.”

The rate of reduction depends on the industry and job-type, but the administration highlighted three industries that traditionally see high workers’ compensation rates: The logging, ski, and dairy industries. Loggers will see reductions of between 16% and 20%, dairy workers an 8% to 12% reduction, and the ski industry a 10% to 14% reduction.

Craft brewers will see a 7% reduction, and according to the administration, many in the manufacturing industries will see dips as well.

Pieciak said also being implemented this year is a workplace safety program for loggers.

“They have some of the highest worker compensation rates in Vermont,” Pieciak said. “Non-mechanized logging had the highest worker compensation rate in Vermont when we started this work. So the rates have gone down for them. Non mechanized logging was over $50 for every $100 in payroll in 2016, and that’s down to more like $28 per $100 of payroll now. Plus, they get the benefit of this onsite safety program which has been established. We have a vendor we’ve selected come and certify implementing safety practices in their operation on the job site. They also get a 15% premium credit applied to their compensation rate.”

Pieciak said there’s evidence to suggest that this has led to wage growth across the workforce. According to Pieciak, rates had been so high that some employers were skirting the rules. Now that rates are lower, more will comply, and the pool will be healthier for it.

He said this won’t affect the benefits people are receiving.

“As we work to grow the economy and the size of our workforce, addressing the high cost of doing business in Vermont is critical,” said Scott in a release. “A major expense for Vermont businesses has been workers’ comp insurance, so I’m incredibly pleased we’ve been able to continually reduce these costs, without reducing benefits for workers. These savings will help Vermont employers of all sizes hire more workers, increase salaries and expand their operations in our state.”


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