Insurance Rate Rising Because of Activist Court

Insurance Rates Rising After Ruling by Activist PA Court
After 20-years of stability, state workers comp system in chaos following ruling by state Supreme Court

HARRISBURG – Pennsylvania’s leading small-business organization today said a recent state Supreme Court decision that tossed a portion of the state workers’ compensation law will result in steep increases in insurance policies that small businesses are required to carry. The higher rates were set in motion today by the Pennsylvania Compensation Ratings Bureau (PCRB), which filed an interim loss cost request with the state’s Insurance Department. The filing states that, due to the court ruling, losses are expected to rise over 6-percent. It’s the first increase in two decades. The loss cost data is used by carriers to set premiums. The higher loss cost filing likely means many employers will face double-digit premium increases next year.

“The court ruling has created an untenable situation for small-business owners who now face double-digit premium increases in November,” said Kevin Shivers, Executive State Director of NFIB Pennsylvania, an association representing 14,000 businesses statewide. “It is imperative that our lawmakers address this situation immediately with legislation. We don’t want to see businesses closing or workers laid off due to an unstable insurance market.”

The Pennsylvania Supreme Court recently ruled in Protz v WCAB (Derry Area School District) that a section of the state’s Workers’ Compensation Act is unconstitutional because guides used by physicians for re-evaluating an employee’s level of disability come from a private source â€" the American Medical Association. Currently, more than 30 states also use the AMA disability guidelines in their workers’ compensation laws.

“It’s disappointing that an activist state court would strike a 20-year-old law that has stabilized workers compensation insurance rates in Pennsylvania,” Shivers continued. “Pennsylvania small-business owners already must contend with scores of statutory and regulatory obstacles that make it difficult to run a business. Surging insurance rates because of this decision just make it even harder.

“Few policymakers in office today remember the insurance crisis of the 1980s and 90s, when soaring medical claims and runaway litigation led to annual double-digit premium increases and several carriers threatened not to insure businesses operating in Pennsylvania. The bipartisan workers comp reforms of ’93 and ’96 stabilized the state insurance market. Without immediate action by the Legislature, it’s likely Pennsylvania’s insurance market will backslide down the slippery slope.”

NFIB is the nation’s leading small business advocacy association, with offices in Washington, D.C. and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small- and independent-business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists send their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system.