The National Council on Compensation Insurance (NCCI) has proposed a 9.1% reduction in workers’ compensation loss costs in West Virginia, according to a statement from Virginia Gov. Jim Justice’s office.

The recommended reduction will apply to all standard ratings, with a 10.4% reduction proposed for the specific risk market. Loss costs are used as the primary variable used in calculating workers’ compensation premiums for companies.

According to AM Best, the recommendation marks the 20th consecutive year of reductions in base workers’ compensation rates in West Virginia. The proposed rate cuts are expected to reduce insurance costs for businesses by about $15 million.

West Virginia Insurance Commissioner Alan L. McPhee cited lower claims costs as a primary factor behind the continued decline in rates.

McVey noted that the average cost per claim in the state has been consistently lower than national and regional averages, with losses declining by more than 20% between 2018 and 2022.

McVey also pointed to West Virginia’s strong economy and rising wages as contributing factors. As wages have grown, premiums have risen even as losses have fallen, signaling to ratemakers that there is room to lower premiums.

Read more: What are the most expensive workers’ compensation claims?

Workplace safety was highlighted as another important factor in lower rates. McPhee emphasized that employers who maintain safe workplaces tend to file fewer claims, which leads to lower costs, both in direct workers’ compensation expenses and in the hidden indirect costs associated with large claims.

The governor’s statement also hailed the privatization of the workers’ compensation market as a key driver of cost reduction. In 2005, West Virginia passed legislation to transition to a private market, with the first private carriers beginning to write workers’ compensation policies in 2008. Since then, businesses in the state have saved an estimated $481 million.

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