New workers comp
rate cut proposed

The 10.5 percent reduction
would be the second in two years

By Rick Daysog
Star-Bulletin

Hawaii businesses will save $100 million over the next two years thanks in part to a proposed 10.5 percent reduction in workers compensation rates, Gov. Ben Cayetano said today.

The rate relief underscores improvements in Hawaii's workers compensation system, which hit a crisis point several years ago when premiums soared and many isle small businesses were unable to find traditional coverage.

"This downward trend in lower workers compensation rates is a direct result of reforms made into law since 1995 aimed at easing one of the heaviest burdens on Hawaii businesses," Cayetano said.

On Wednesday, the National Council on Compensation Insurance -- an industry trade group which represents workers compensation insurers in Hawaii -- filed for a 10.5 percent rate reduction with state Insurance Commissioner Rey Graulty. If approved, the new rates would go into effect Nov. 1. and will serve as the basis for rates charged by insurers no later than Feb. 1.

This week's filing comes after the Cayetano administration last year approved a 27 percent workers compensation rate cut -- the state's first in seven years.

Cayetano, who announced the rate reduction this morning before the Chamber of Commerce of Hawaii's policy convention, noted that the Hawaii's construction industry -- hard-hit by the building downturn -- will save $5 million next year under the new rates.

That's due to a premium adjustment credit on hourly wages paid to construction workers, he said.

Cayetano noted the state has made major changes in Hawaii's workers compensation system.

Those changes include the formation of a nonprofit corporation known as the Hawaii Employers' Mutual Insurance Co. to cover small businesses facing high premiums, creation of a special unit in the state Labor Department to improve administration of claims filed by injured workers and creation of incentives for employers who set up prevention programs.

Despite recent improvements, workers compensation reform continues to be a major concern. Many are worried about a recent state Supreme Court ruling that lets employees who suffer stress from disciplinary actions collect workers compensation benefits.

Cayetano said that the state will likely introduce legislation that deals with that ruling as well as workers compensation fraud.

But he said businesses need to do more to make workplaces safer and reduce their premiums.