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

March 10, 2022

/Property & Casualty

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

Loss Cost
Difference from 20212021
Loss Cost
0042Landscape Gardening4.72-5.2%4.98
1701Cement Mfg.3.388.7%3.11
1710Stone Crushing and Drivers3.7611.9%3.36
2802Carpentry—Shop Only5.4115.4%4.69
2883Furniture Mfg.—Wood4.065.7%3.84
3030Iron/Steel Fabrication—Structural/Shop6.63-2.1%6.77
3040Iron/Steel Fabrication—Ornamental/Shop6.0718.1%5.14
3076Sheet Metal Products Mfg.—Shop3.7816.0%3.26
3365Welding or Cutting NOC3.345.4%3.17
3724XMillwright/Electrical Apparatus Install4.8524.7%3.89
5020Ceiling Installation—Suspended Acoustical Grid Type4.158.9%3.81
5022Masonry, Plastering, or Stucco5.3713.1%4.75
5102Metal Door, Door Frame or Sash Erection4.519.7%4.11
5183Plumbing NOC2.867.1%2.67
5188Automatic Sprinkler Installation3.078.1%2.84
5190Electrical Wiring—Within Bldgs.2.6713.6%2.35
5213Concrete Construction NOC4.768.4%4.39
5215Concrete Construction—Private Residences4.4716.1%3.85
5221Concrete Work—Slab on Grade3.4315.5%2.97
5348Tile, Stone, Mosaic, or Terrazzo3.3714.6%2.94
5403Carpentry NOC5.4916.1%4.73
5437XCarpentry—Interior Work3.929.8%3.57
5445Wallboard Installation3.9710.9%3.58
5474Painting or Paper Hanging NOC4.879.9%4.43
5480Plastering NOC4.411.4%3.95
5535XSheet Metal Work4.9913.4%4.4
5537Heating, Ventilation, A/C Installation, Service, Repair and Drivers2.8917.0%2.47
5551Roofing—All Kinds10.94-2.9%11.27
5606Contractors—Executive Supervisors0.963.2%0.93
5645Carpentry—Detached 1 or 2 Family Dwellings7.1914.5%6.28
5651Carpentry—Dwellings Not Over 3 Stories (2013 n/a; see 5645) 0-
6204Drilling NOC and Drivers8.9524.7%7.18
6217XExcavation/Grading of Land2.787.3%2.59
6229Irrigation/Drainage System Construction3.4615.0%3.01
6306Sewer Construction3.771.1%3.73
6319Water Main Construction2.968.4%2.73
6325Conduit Construction2.9311.0%2.64
6400Fence Erection—Metal3.921.3%3.87
7538Electric Powerline Construction and Drivers3.63.4%3.48
7600Telecommunications Co.: Cable TV or Satellite (all other employees, drivers)4.7624.3%3.83
7605Burglar Alarm Installation or Repair and Drivers1.8811.9%1.68
8227Contractors Permanent Yards4.7319.4%3.96
8742Salespersons, Messengers—Outside0.5913.5%0.52
8810Clerical Office Employees NOC0.2816.7%0.24
9403Ashes Collection and Drivers12.1414.4%10.61
9519Household Appliances—Electrical—Installation and Drivers4.77.6%4.37
9521XFloor Covering—Installation4.1314.7%3.6
9534Mobile Crane/Hoisting2.93-2.0%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.



P&C 101: Workers’ Compensation


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