S.C. Workers’ Comp Said to be in Crisis as Rates Rise Again

Workers compensation loss costs may increase by 18.4 percent for businesses in South Carolina effective Dec. 1, 2006.

Robert Herlong, vice president and regional manager for Property Casualty Insurers of America, said South Carolina has reached a crisis situation that requires the Legislature to enact significant reform. He said premiums have jumped 30 percent in three years, but 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,” Herlong said. “And that, coupled with the large assessment for the Second Injury Fund, create an unstable environment for workers compensation insurance. Additionally, these increases cripple small businesses, adversely affect the availability of workers compensation insurance and make it difficult for insurers to hold the line on increases.”

While the administrative judge reduced the 33 percent increase recommended by the National Council on Compensation Insurance, the increase that was approved confirms costs continue to jump dramatically. In recent years, medical and indemnity costs, attorney involvement and Second Injury Fund assessments have increased sharply in South Carolina. For example, the state’s Second Injury Fund increased its assessment by nearly 100 percent, to more than $250 million in 2005.

“Reform of the workers compensation system, including the repeal of the Second Injury Fund, will continue to be among the top legislative priorities for the business community and insurers,” Herlong said. “Last year legislation passed the House but stalled in the Senate. Going forward, we will continue to work with legislators to achieve comprehensive reform that will reduce costs, protect injured workers and encourage business development and job creation