A top headache for many business owners — insurance that pays for lost wages and medical bills when an employee is hurt on the job — could get cheaper next year.

A national group that determines base rates for Virginia workers’ compensation insurance premiums has proposed a 12.4 percent average cut for most employers.

The highest-risk employers — those who can’t find insurers to voluntarily issue policies — would see a 14.1 percent cut in their costlier base rates, under the latest proposal by the National Council on Compensation Insurance.

“This is obviously good news,” said Keith D. Cheatham, vice president-government affairs at the Virginia Chamber of Commerce.

The big reasons the council cited for the proposed reductions are:

•A decline in the frequency of claims — in 2008, the latest year for which complete data is available, the rate fell to 13.5 for each million dollars of premiums paid, from 14.4 in 2007, the council reported in a filing with the State Corporation Commission last week.

•Almost no increase in the sum paid for each case for lost wages — to $24,893 per case in 2008 from $24,551 per case in 2007.

•Continued slowing of the rate at which medical costs per case are rising — to $42,665 per case in 2008 from $41,963 in 2007.

“Any reduction in fixed costs, even workers’ compensation insurance, is welcome relief for industrials these days,” said Brett Vassey, president of the Virginia Manufacturers Association.

“I would suspect that the major driver of the proposed reductions is probably weighted heavier on the claim frequency issue,” he said, adding that layoffs and stepped-up investment in safety measures are likely reasons.

But, he added, “we remain deeply concerned about the rising medical costs per case in Virginia.”

Insurance companies use the council’s rates to calculate their own charges. The council has more than 300 affiliates.

The council’s proposal is based on the cost of paying for care and for lost wages, while the companies must also take account of other operating costs in their prices.

Meanwhile, the council’s base rate changes vary depending on the type of employer. Under its new proposal:

•Manufacturers, other than the high-risk group, would see base rates decline an average 10.3 percent, with a maximum decrease of 25 percent and a maximum increase of 5 percent.

•Contractors would see an average 13.1 percent base rate decline, ranging between a maximum decrease of 28 percent and a maximum increase of 2 percent.

•Employers of office and clerical workers would see an average 14.9 percent decrease in base rates, ranging between a maximum decrease of 30 percent and no change.

The council’s proposal is subject to review and approval by the State Corporation Commission.

via Workers’ compensation premiums could be cut | Richmond Times-Dispatch.