With fewer on-the-job worker injury claims and more stable costs for treatment, Tennessee is cutting the rates charged employers for workers' compensation for the 11th straight year.
The Tennessee Department of Commerce and Insurance, which oversees the state's workers' compensation program, said the average cost of workers compensation insurance will drop by 9.4% for the voluntary market starting March 1. The decrease follows declines of 10.2% in 2023 and 5.6% in 2022, according to state regulators.
"The continued insurance premium decrease bolsters Tennessee's pro-business climate and keeps our economy strong," Tennessee Gov. Bill Lee said in an announcement of the latest rate cut. "Lowered premiums mean business owners have the opportunity to reinvest in their companies and better serve their employees."
Employees who have suffered an injury or illness at work are entitled to receive the medical and wage replacement benefits as prescribed by the Tennessee workers' compensation law, according to the state Department of Commerce and Insurance. Benefits are provided by employers through their insurance providers or third-party administrators and cover both expenses for medical care and partial wage replacement for employees who are unable to work or continue to work but earn less pay while recovering from their injuries.
A decade ago, Tennessee moved the state's workers' compensation claims process from a tort system to an administrative process. Injured workers usually get benefits quicker than under the court-litigate process, but they no longer may use attorneys in court to challenge decisions on their claims.
Insurers and employers complained in the past the judicial appeal process led to unpredictable, inconsistent and more favorable rulings for injured workers from courts than the administrative claims process used today. Tennessee had above average rates for workers' compensation insurance prior to the 2014 reforms, but rates have dropped every year since.
"It's a tremendous success story for business," Jim Brown, the Tennessee state director for the National Federation of Independent Business, said in a telephone interview. "We knew our workers' comp system was badly broken 12 years ago and needed a major overhaul, and since we changed the system, our loss cost multiplier has dropped by more than 70%, and most businesses have seen commensurate declines in their rates. That means more dollars are available for businesses to hire workers, grow their businesses and make investments, and I think it is one of the reasons our economy is doing so well."
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The decline in overall loss costs last year reflects a nationwide trend toward fewer reported workplace injuries and lower indemnity costs. Workers' compensation claim frequency in the United States has declined for all but two of the past 20 years, according to the National Council on Compensation Insurance. The drop reflects technological work practices that have automated many of the most dangerous jobs and employers investing more in safety training and hazard reduction.
"Tennessee's workforce will benefit from these loss cost reductions because they are the result of decreases in lost-time claim frequency and more stable claims costs," Tennessee Insurance Commissioner Carter Lawrence said in an announcement of the latest rate cut, which he approved in a Dec. 30 order.
The latest workers' comp rate cut in Tennessee was based on a filing by the National Council on Compensation Insurance and recommendations from the Tennessee Advisory Council on Workers' Compensation. The national council recommended an 11.1% overall decrease, while the advisory council called for a 7.7% drop, based on calculations from By the Numbers Actuarial Consulting firm.
Lawrence also approved a rate decrease for the assigned risk market of 9.7%.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.