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Friday, March 31, 2006

Workers' Comp Firm Trims Rates

By Winthrop Quigley
Journal Staff Writer
    The state's largest workers' compensation insurance company by revenue, New Mexico Mutual Group, will lower its rates an average of 2.5 percent effective Saturday, the company announced.
    New Mexico Mutual's most favored customers, representing about half of the $66 million in premium collected in 2005, will see rates decline 3 percent. The company's second tier of customers, who are riskier to insure than the top-tier customers, will see a 2.6 percent decrease.
    Second-tier companies paid 38 percent of the premiums New Mexico Mutual received in 2005.
    The highest-risk customers, representing 11 percent of total premium, will see no change in their rates Saturday.
    According to New Mexico Mutual, most other workers' compensation insurance companies are expected to raise their rates at least 4 percent this year, based on analyses by the National Council on Compensation Insurance. The council, based in Florida, provides data analysis and consulting to the workers' compensation industry.
    New Mexico Mutual president Chris Krahling said improved workplace safety and a reduction in in-patient hospital costs lowered the company's costs.
    The State Workers' Compensation Administration, which oversees New Mexico's workers' compensation system, directed hospitals to lower rates charged for workers' compensation cases to market rates, Krahling said. This resulted in $1.3 million in savings to the company in 2005. Krahling said hospitals had been charging workers' compensation cases above market rates to make up for hospital revenue shortfalls.
    "I believe (the rate reduction) is indicative of the workers' compensation system in New Mexico being more responsive to the needs of business," Krahling said. "It's beneficial to the state's economic development agenda."
    Workers' compensation insurance pays health care costs for workers injured on the job.
    New Mexico Mutual has about a third of the voluntary market in the state. The voluntary market excludes self-insured companies and taxpayer-funded employers.