Workers’ Compensation Reform Tops PCI’s 2006 Legislative Agenda in S.C.

Comprehensive reform of the South Carolina workers’ compensation system, including the repeal of the Second Injury Fund are the top legislative priorities of the Property Casualty Insurers Association of America during the state’s 2006 legislative session in Columbia, S.C.

“Workers’ compensation costs are increasing at an alarming rate,” Robert Herlong, PCI vice president and regional manager explained. “As a result, Gov. Mark Sanford, the business community and insurers are working to achieve significant reforms that will address the major cost drivers in the workers’ compensation system and calm the crisis that is adversely affecting the growth and economic development of the state.”

PCI supports the recently released recommendations of the governor’s workers’ compensation task force that would help to curtail costs. The task force’s recommendations include the dissolution of the Second Injury Fund; putting restrictions on repetitive trauma claims; eliminating the presumption of total back loss with a 50 percent injury; and reversing the Tiller v. National Healthcare case that allows non-expert testimony regarding a medical condition.

“The task force took on an incredibly complex issue and did a great job of focusing on specific areas that need to be addressed,” Herlong said. “The task force received input from a wide range of interests and found consensus in the goal of seeking solutions that will make the system work better for workers, employers and insurers.

South Carolina has traditionally been a low cost workers’ compensation state. However, in recent years medical and indemnity costs, attorney involvement and Second Injury Fund assessments have increased sharply. Earlier this year, the National Council on Compensation Insurance recommended that workers’ compensation advisory loss costs should increase by 33 percent. In addition the state’s Second Injury Fund increased its assessment by nearly 100 percent, to more than $250 million.

“These dramatic increases are hurting the business climate and crippling small businesses,” Herlong said. “However, the pace of premium increases is not keeping up with costs.

“The costs associated with the workers’ compensation system are increasing at a faster rate than in other states and the large assessment of the Second Injury Fund creates an unstable insurance environment,” he said. “This environment adversely affects the availability of workers’ compensation insurance, makes it more difficult for insurers to hold the line on increases and creates a drag on the state’s economy. We have reached a crisis situation that requires the Legislature to enact significant reform.”

When the South Carolina General Assembly reconvenes Jan. 10 for the second year of its two-year session, PCI will also work with legislators to address coastal property insurance issues. In addition, PCI will seek to protect consumers from the negative effects of several bills involving auto glass and repair shop restrictions.