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Workers' Compensation costs have gone down in Hawaii over the past four years and premiums paid by employers should
again decline, despite futile attempts to reform the system. The Legislature and the Lingle administration should seek
common ground during the next session to help companies cope with the economic difficulties ahead.
Decreases in costs of the system dropped from third-highest in the nation in 2003 to 15th-highest in 2006, as the average
premium went from $5.36 to $4.49 for every $100 of payroll.
J.P. Schmidt, Hawaii's insurance commissioner, reports decreases in loss cost - the amounts paid for claims by insurers
- of 11.6 percent in the past year. The loss costs had decreased by 19.3 percent, 18.2 percent and 12.3 percent in the
previous three years.
Schmidt said the figures represent "one of the largest declines in Workers' Compensation insurance rates of any state in
the nation." The reduction of premium costs expected in January "will help Hawaii employers offset some of the other
rising costs they are facing," he said.
Much of the credit should go to the state Department of Labor and Industrial Relations, which has tried to find areas
needing improvement and streamline internal operations. The department made rule changes in 2005 patterned after a
California reform measure that would have saved businesses $100 million a year if they had not been blocked by the
Legislature.
Schmidt said he will "need to work with the Legislature to reduce the adversarial nature of the system and improve the
quality of care to our injured workers so that they can return to work promptly without the unnecessary prolonged
absence from work."
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THE ISSUE