For Immediate Release                                                      Contact: Cam Crawford
October 3, 2006                                                                Phone: 803-771-0008

Workers Compensation Insurance Rates Sky Rocket With Double Digit Increase For South Carolina Businesses

Employers and Employees Likely to Feel Impact of Rate Increase Through Wage Stagnation, Stifled Revenue Growth and Limited Job Creation

COLUMBIA, S.C. – Members of the South Carolina Civil Justice Coalition, the preeminent organization in South Carolina that is fighting for a restructuring of the workers’ compensation system, expressed disappointment over the recent ruling by the South Carolina Administrative Law Court in favor of an 18.4 percent increase in worker’s compensation insurance rates.  This marks the third straight year of double-digit increases, with a 17 percent increase in 2004 and a 12 percent increase in 2005.

“To put those increases in monetary terms, if a company was paying $25,000 in workers’ compensation rates in 2004, that same company will now be paying $38,787,” said SC Civil Justice Coalition Executive Director Cam Crawford. “Now take that $13,787 increase per company and multiply that by the number of companies in South Carolina – now our folks can see the impact those increases have on capital investment, unemployment rates and the state’s per capita income.”

The South Carolina Civil Justice Coalition believes it has the answer to the state’s alarmingly increasing rates in the workers’ compensation system restructuring bill it crafted last year and the bill that will be introduced this coming session in January 2007 that addresses cost drivers to the system.

South Carolina Civil Justice Coalition Chairperson Cathy Novinger noted:  “From the macro level, this bill has four goals: Stabilize the workers’ compensation system, speed up compensation to injured workers, increase accountability in the system and make the rates significantly more predictable.”

“The Coalition, which basically represents business in South Carolina, faces a formidable opponent in the trial lawyers, who specialize in capitalizing on the subjectivity and unpredictability of the South Carolina's workers’ compensation system,” said Crawford.

“Because fees paid to trial attorneys depend on whether the injured worker receives a permanent disability award, it should come as no surprise that trial lawyers take advantage of disability claims. They take one-third of the injured workers’ settlements,” Crawford continued. “The Civil Justice Coalition believes this plays a major factor in driving up litigation and other costs in what is supposed to be a ‘no fault’ system.”

The reforms proposed by the Civil Justice Coalition, the business community and endorsed by the Governor, would reduce fraud, reduce subjectivity in the awards, eliminate the Second Injury Fund, and repeal a number of South Carolina Supreme Court rulings – all of which drive the cost of the system well beyond neighboring states. 

According to the National Council on Compensation Insurance, South Carolina companies are experiencing 30 to 40 percent higher workers compensation losses than neighboring states.  Rate increases over the past five years are significantly higher than most other states in the southeast. The current workers compensation system is awarding benefits on average 57 percent above the impairment rating. With such excessive awards, it is no surprise that South Carolina’s workers compensation costs are much higher than other states.  Neighboring southern states award benefits on average only eight percent above the impairment rating.

Comparatively speaking, the North Carolina Rating Bureau recently asked for only a 9.8 percent increase, but a spokeswoman for the North Carolina Commissioner of Insurance stated that generally, North Carolina’s rating bureau does not get the rate increases it requests. “We look at the rate filings with a healthy skepticism,” she said.

The South Carolina Civil Justice Coalition is an organization that fights for legal reform in South Carolina.  It is made up of executives from large and small businesses and officials from business associations. 

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