Workers' comp kept in check

Rates could to go up 9.8%, far less than originally sought

As owner of Rusty's Auto Driver Training School in Summerville, Rusty Hires knows all about the cost of doing business.

Rising gas prices and insurance premiums keep chipping away at the profits of his 40-year-old company. It's a challenge just to stay in business, he said.

"There's only so much you can charge for your services," Hires said.

So one thing he certainly doesn't want is an increase in his workers' compensation costs. As it is for many small businesses, the premium for coverage for employees who are injured on the job is one of his biggest expenses after payroll.

That is likely to continue if a proposal to increase workers' comp rates in South Carolina by an average of nearly 10 percent is approved by a state court.

The good news is that the increase is far less than the amount proposed by a Florida-based trade group that recommends workers' comp premium levels for South Carolina and 35 other states.

The National Council on Compensation Insurance, or NCCI, has reached a settlement with business and consumer advocates for rates to rise by an average of 9.8 percent starting July 1. NCCI had been seeking a nearly 24 percent average increase.

Workers' comp rates affect the bottom line of thousands of businesses across the state. Any employer with four or more workers is required to buy the insurance, which covers medical costs and some wages for workers who are injured on the job.

The proposed "average" increase means that premiums for some industries and professions could increase more or less than others. The council's figures are a basis that private insurers use to set prices.

Frank Knapp of the S.C. Small Business Chamber of Commerce in Columbia, which objected to the original proposal, estimated the smaller increase will save employers more than $130 million.

And the news could be better next year. As part of the settlement, NCCI must apply for another rate change before July 2009. Knapp said market data show that rates are falling, and there's a chance that a year from now NCCI will file for a decrease. "That's the best we've ever done," Knapp said of the settlement. "It's really good news, and in 12 months we'll have even better news."

The latest rate increase comes on the heels of an 18.4 percent jump that went into effect in late 2006. NCCI, which at that time had asked for a 32.9 percent rise, said the increases were necessary because the system pays out more in claims than it brings in.

NCCI spokeswoman Amy Quinn agreed Thursday that rates could fall before next year. "We'll be more than happy to file a decrease if that's what the experience is showing," Quinn said.

NCCI applied for the latest increase in April 2007, but the state Department of Insurance denied it, saying it was excessive. The council then appealed to the state Administrative Law Court before settling the matter.

Reach Peter Hull at 937-5594 or phull@postandcourier.com.