An interesting thing happened in Nevada today. And it may eventually affect employers around the rest of the country, especially in Massachusetts.
Workers' compensation is amazing. It's very stable in that every employee in the nation is covered by one form of it or another (except some of those in Texas; but we'll write about that at another time).
But it's also a very fluid social engineering concept because every state has its own version of the law. Fifty states, fifty laws.
Which brings us back to Nevada. The state, like most other states in the nation, is represented by the National Council on Compensation Insurance (NCCI) for purposes of rate filing. Some states, like Massachusetts, have their own "Bureaus" that represent insurers in the state and file rate request changes with their respective Divisions of Insurance.
Today, Nevada's Commissioner of Insurance approved a rate filing request of the NCCI, and for most Nevada employers this will a mean a reduction in their next workers' compensation premium of about 12.3%.
But the really interesting thing involves what is known as the ARAP. In Massachusetts, that stands for All Risk Adjustment Program, and is a kind of Experience Modification surcharge on top of the regular Experience Modification. In the rest of the country, ARAP stands for Assigned Risk Adjustment Program. Here's what the difference is: in Massachusetts every emplpoyer, whether in the Assigned Risk Pool or the voluntary market, is eligible for an ARAP surcharge. In the rest of the country, the surcharge only applies to employers in the Pool. But regardless of where an employer happens to be, the maximum surcharge is 49%. That is, until today.
Hidden in the Nevada filing is a reduction in the maximum ARAP surcharge, from 49% to 25%. This is the main reason why overall rates in Nevada's Assigned Risk Pool will drop by approximately 15%.
We're going to watch further NCCI rate filings to see if the ARAP maximum surcharge is reduced in other states, as well. In addition, we'll continue to lobby on behalf of Massachusetts employers to have the ARAP surcharge apply only to employers in the Pool. And we'll keep you informed.
Peace to all.