The Maine Bureau of Insurance has paved the way for an average 9.6% rate reduction in workers’ compensation insurance premiums for the coming year, saving Maine employers as much as $27 million in the months ahead.

The reduction continues a downward trend since the state reformed workers’ comp in 1993, but it’s especially welcome this year as Maine businesses struggle with rising costs and an increasingly uncertain economic climate.

The bureau announced Wednesday that it has accepted Maine’s lost costs assessment for 2024 from the National Council on Compensation Insurance (NCCI), which analyzes workers’ comp losses for 38 states based on past and projected benefit payments.

Maine’s average 9.6% decrease in loss costs is the fourth-greatest reduction among participating states, after Maryland, Virginia and Texas, said Maine Insurance Superintendent Bob Carey. It takes effect on Tuesday for all new and renewing policies.

Loss costs are workers’ comp payments that cover medical care, time off and other costs related to on-the-job injuries. Premium reductions will range from 6.5% to 10.7%, depending on the industry.

“Most Maine businesses will see a reduction in their workers’ compensation premiums,” Carey said in an emailed statement. “However, some businesses may pay higher rates if their experience differs materially from the average.”

NCCI is the advisory ratings organization for insurance companies that offer workers’ comp coverage, Carey said. Its loss cost assessments are available to insurers when filing claims with the state bureau, he said.

Maine has had some of the highest workers’ comp costs in the nation in recent years, at $1.67 per $100 of payroll in 2022, compared to about $1.31 nationally, according to the latest available biennial analysis by Oregon’s consumer and business agency.

This year’s rate reduction is good news for Maine employers, including those covered by MEMIC, the largest workers’ comp provider in the state. Owned by its policy holders, MEMIC underwrites about 17,500, or 65%, of Maine’s employers.

“In the last four years, we have seen these loss costs, which translate into rates, decrease by more than 43%,” said Michael Bourque, president and CEO of The MEMIC Group, a Portland-based provider of workers’ comp insurance nationwide.

Since the Legislature reformed workers’ comp regulations in 1993, premium rates are down more than 70% overall, Bourque said.

But Bourque doesn’t expect premium rate decreases to continue given the uncertain economic conditions facing Maine businesses, including inflation, labor costs, rising medical expenses and the instability of Washington policy.

“We worry about the potential impact of Canadian tariffs on Maine businesses, and about industries where immigrants work, and nonprofits that rely on government funding,” he said. “The economic outlook is murky and we’re seeing things that give us reason to be cautious.”

To keep costs in check, MEMIC will have to be careful and smart when underwriting businesses at higher risk and continue to promote workplace safety measures that reduce injuries, he said.

Workers’ compensation is insurance that employers provide for employees in case they are injured on the job. Benefits include weekly pay for lost time and payment for medical bills, prescriptions, vocational rehabilitation and loss of life or body parts.

Workers’ comp costs vary from state to state and depend on the employer’s safety record, the industry’s risk level and the benefits required by law.

Patrick Woodcock, executive director of the Maine State Chamber of Commerce, which represents over 5,000 businesses, agreed that Maine’s reduced workers’ comp rates come at an opportune time.

“There’s a lot of uncertainty for the next few quarters,” Woodcock said. “This reduction is really welcome during this turbulent period.”

‘A STATEMENT OF SUCCESS’

Woodcock attributed the long-term reduction to increased attention to workplace safety and training, with MEMIC leading the way.

“It’s a statement of success,” Woodcock said. “Workers are experiencing fewer injuries and investments in workplace safety are paying off.”

David Labbe, senior vice president and chief financial officer at Kittery Trading Post, acknowledged the benefits of safety training and lower workers’ comp premiums.

One of the largest family-owned businesses in southern Maine, the sporting goods store has 325 employees year-round and 375 during the summer tourist season.

“Any costs you can save in this environment are welcome,” Labbe said. “The more safe you are, the fewer claims you have, the lower workers’ comp premiums you have in the future.”