Hawaii Insurance Division Approves 8.2% Increase in Workers’ Compensation Loss Cost Rates

Read more to get more detail across specific class codes and industry segments, as well as an explanation as to why rates are going up and how you can differentiate yourself to underwriters.

The National Council on Compensation Insurance, Inc. (NCCI) recently requested an 11.2% average workers’ compensation (WC) loss cost rate increase for 2022, subject to approval by the Hawaii Insurance Division. After reviewing the NCCI request, the Hawaii Insurance Division approved an average +8.2% change to the WC loss cost, effective January 1, 2022. The loss cost trend of increases from 2021 has carried over into 2022 and is largely attributed to rising costs for average indemnity and medical only claims, while combined ratios stay relatively consistent. The impact will vary across the different rating classifications, but the below information provides more detail across specific class codes and industry segments.

Hawaii Lost Cost Filing January 2022 was 8.2% overall

Source: NCCI Hawaii State Advisory Resources, November 2021

January 2022: Workers’ Compensation Rate Change by Specific Construction Classifications

Code Description 2022
Loss Cost
Difference from 2021 2021
Loss Cost
0042 Landscape Gardening 4.72 -5.2% 4.98
1701 Cement Mfg. 3.38 8.7% 3.11
1710 Stone Crushing and Drivers 3.76 11.9% 3.36
2802 Carpentry—Shop Only 5.41 15.4% 4.69
2883 Furniture Mfg.—Wood 4.06 5.7% 3.84
3030 Iron/Steel Fabrication—Structural/Shop 6.63 -2.1% 6.77
3040 Iron/Steel Fabrication—Ornamental/Shop 6.07 18.1% 5.14
3076 Sheet Metal Products Mfg.—Shop 3.78 16.0% 3.26
3365 Welding or Cutting NOC 3.34 5.4% 3.17
3724X Millwright/Electrical Apparatus Install 4.85 24.7% 3.89
5020 Ceiling Installation—Suspended Acoustical Grid Type 4.15 8.9% 3.81
5022 Masonry, Plastering, or Stucco 5.37 13.1% 4.75
5102 Metal Door, Door Frame or Sash Erection 4.51 9.7% 4.11
5183 Plumbing NOC 2.86 7.1% 2.67
5188 Automatic Sprinkler Installation 3.07 8.1% 2.84
5190 Electrical Wiring—Within Bldgs. 2.67 13.6% 2.35
5213 Concrete Construction NOC 4.76 8.4% 4.39
5215 Concrete Construction—Private Residences 4.47 16.1% 3.85
5221 Concrete Work—Slab on Grade 3.43 15.5% 2.97
5348 Tile, Stone, Mosaic, or Terrazzo 3.37 14.6% 2.94
5403 Carpentry NOC 5.49 16.1% 4.73
5437X Carpentry—Interior Work 3.92 9.8% 3.57
5445 Wallboard Installation 3.97 10.9% 3.58
5474 Painting or Paper Hanging NOC 4.87 9.9% 4.43
5480 Plastering NOC 4.4 11.4% 3.95
5506 Street/Road—Paving 5.37 5.5% 5.09
5507 Street/Road—Subsurface 3.59 12.2% 3.2
5535X Sheet Metal Work 4.99 13.4% 4.4
5537 Heating, Ventilation, A/C Installation, Service, Repair and Drivers 2.89 17.0% 2.47
5551 Roofing—All Kinds 10.94 -2.9% 11.27
5606 Contractors—Executive Supervisors 0.96 3.2% 0.93
5645 Carpentry—Detached 1 or 2 Family Dwellings 7.19 14.5% 6.28
5651 Carpentry—Dwellings Not Over 3 Stories (2013 n/a; see 5645)   - 0-
6204 Drilling NOC and Drivers 8.95 24.7% 7.18
6217X Excavation/Grading of Land 2.78 7.3% 2.59
6229 Irrigation/Drainage System Construction 3.46 15.0% 3.01
6306 Sewer Construction 3.77 1.1% 3.73
6319 Water Main Construction 2.96 8.4% 2.73
6325 Conduit Construction 2.93 11.0% 2.64
6400 Fence Erection—Metal 3.92 1.3% 3.87
7538 Electric Powerline Construction and Drivers 3.6 3.4% 3.48
7600 Telecommunications Co.: Cable TV or Satellite (all other employees, drivers) 4.76 24.3% 3.83
7605 Burglar Alarm Installation or Repair and Drivers 1.88 11.9% 1.68
8227 Contractors Permanent Yards 4.73 19.4% 3.96
8742 Salespersons, Messengers—Outside 0.59 13.5% 0.52
8810 Clerical Office Employees NOC 0.28 16.7% 0.24
9403 Ashes Collection and Drivers 12.14 14.4% 10.61
9519 Household Appliances—Electrical—Installation and Drivers 4.7 7.6% 4.37
9521X Floor Covering—Installation 4.13 14.7% 3.6
9534 Mobile Crane/Hoisting 2.93 -2.0% 2.99

Why Are WC Rates Going Up?

While most NCCI states are experiencing loss cost/rate level reductions, Hawaii is seeing an increase in loss cost rates for a second year in a row. The impact of prior WC decisions is making it harder to deny compensability of a claim and continued treatment, which leads to increases in the overall cost of the claim. Many of our carrier partners agree that costs due to precedence set by prior decisions is what’s behind these increases.

The effects of the COVID-19 pandemic also have an overall impact on the workers’ compensation marketplace. The initial mandates causing the closure of certain government agencies, specifically the Department of Labor, postponed hearings for WC claims and led to a backlog of cases. The costs associated with these delays comes in the form of further lost time/wage replacement payments and continued medical care. The longer a claim lingers, the cost of the claim generally increases.

Shortage of Qualified Labor

Another underlying factor in the higher WC loss costs is the current shortage of skilled workers. According to a recent report by the National Association of Home Builders, the construction industry needs more than two million additional workers over the next three years to keep up with the demand for new houses amid the current labor shortage.

What’s the connection between the labor shortage and WC rates? According to the Bureau of Labor Statistics, the construction industry accounts for about 6% of all injuries that result in loss of work. As skilled workers leave the job force, some contractors are forced to hire less experienced workers to take their places. With insufficient training of new workers, the loss of skilled and trained workers on the job, and bridging the experience gap, the industry is bracing for an increase of injuries at work.

How You Can Differentiate Yourself to an Underwriter

Fortunately, there are some steps you can take to protect your company from the proposed increases we’ve outlined above and separate yourself from the pack as a quality risk in the eyes of the underwriting community.

Safety as a Top Priority. Demonstrating improved safety measures is vital to lowering your overall cost for workers’ compensation. Here are some steps to initiate or restart at your company that could support your team in these efforts:

  • Provide employees with essential safety knowledge resources and best practices
  • Conduct weekly safety meetings
  • Institute safety checks at regular intervals throughout the day
  • Create an incentive program that recognizes and rewards good safety practices
  • Make Safety a company value and hold everyone accountable

We know your workers' safety is a top priority for you as an employer. Most insurance companies offer incentives for a quality safety program in the form of merit rating or underwriter discretionary credits. In fact, there are several carriers that are unwilling to even offer terms if a contractor does not demonstrate a strong commitment toward a safe work environment for their workers.

Staying Engaged When Claims Arise. An employer’s involvement in a claim is essential to ensuring that the claim stays on track. Here are some ways an employer can do this throughout the claims process:

  • Timely and accurate reporting of the claim to the insurance company to avoid late reporting penalties
  • Investigating the cause of the incident
  • Keeping the lines of communication with the injured worker open
  • Working with the claims adjuster
  • Planning and developing a timeline for return to work

It takes a lot of effort and dedication to run a business. A key to managing your overall risk profile is finding the right partner who aligns with your business philosophy. They can help identify and develop claims practices and loss prevention programs and aids the procurement of the right insurance program.

If you have questions about your workers’ compensation or anything about your risk management program, please reach out to your Risk Solution Partners or Woodruff Sawyer representative.



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