Vermont Business Magazine Governor Phil Scott today announced that Vermont businesses will see a double-digit rate decrease in workers’ compensation insurance in 2020. The new rates, approved by the Department of Financial Regulation (DFR), become effective on April 1, 2020.
This is the fourth straight year of rate decreases since Governor Scott took office and represents the largest decrease in over a decade. When combined with decreases from 2017-2019, Vermont employers will pay an average of 30% less in workers’ compensation premiums than they did in 2016.
“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 Governor Scott. “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.”
In the voluntary market – which is the open competitive market - loss costs (the primary component of workers’ compensation rates) will decrease by an average of 11.6%. Approximately 90% of Vermont employers receive voluntary market coverage. In the assigned risk market – which is the market for employers unable to obtain coverage in the voluntary market - rates will also decrease by an average of 12.1%. The continued rate relief in the assigned risk market is particularly good news for new businesses who are often forced to obtain coverage in this market due to lack of claims history.
“Vermont has experienced the largest cumulative reduction in our workers’ compensation rates these past four years compared to any similar time period over the last two decades,” said DFR Commissioner Michael Pieciak. “The cost of coverage is clearly moving in the right direction and is the result of a continued commitment to workplace safety by employers and a continued focus on this market by our department.”
Rate changes vary by industry and classification, however, several key Vermont industries with historically high rates will see significant relief. Vermont’s logging industry will see rate reductions between 16-20%, the skiing industry will see rate reductions between 10-14% and the dairy farming industry will see rate relief between 8-12%. Craft brewers will also experience a reduction of 7% and many segments of the manufacturing sector will see significant decreases.
DFR has also revised a rule that will reduce the price that certain small businesses pay for workers’ compensation coverage by 50%. The revised rule generally applies to one- or two-person small businesses and allows their coverage to be priced at 50% of the Vermont State Average Weekly Wage rather than the full weekly wage average. Currently, many of these businesses choose to exempt themselves from coverage due to the high cost. The revised rule will encourage greater participation in the system thus benefiting workers and ultimately further reducing costs.
The Governor and Commissioner Pieciak recognize the diligent work of the Department of Financial Regulation team that oversees the rate approval process, including Deputy Commissioner Kevin Gaffney, Rosemary Raszka, Pat Murray and Jessica Sherpa.
Source: Montpelier, Vt. – Governor 2.6.2020