The Administration today announced that many 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.
Rates have repeatedly decreased in recent years and this 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.
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.
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%. Manufacturing decreases will average 12.3%.
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.
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