The average cost of a workers’ compensation premium in NH has declined by 66% since 2012, dropping the Granite State from having the 9th highest premium in the nation to ranking 32nd today. One reason for the decline, according to industry analysts and insurance regulators, is improved overall safety in workplaces.
Workers’ compensation insurance rates vary drastically depending on the industry. Premium rates for roofing contractors or tree service companies, whose jobs are risky, are much higher than those for office workers. By being proactive, businesses can lower injury rates and, in turn, workers’ compensation costs.
Mark Aquilino, president of Outdoor Pride Landscaping and Snow Removal in Manchester, has over 250 employees. He says his company has been managing its workers’ compensation and general liability insurance costs by focusing on safety. Aquilino says while insurance costs are a given, “The question is, how do we turn direct expenses like insurance into an investment?”
“If we’re going to have a big dollar value that goes out the door every month, we want to pay the least amount we can. To do this we need to invest in a safe company. We want everyone to come in in one piece and go home in one piece,” he says.
Outdoor Pride invests in safety through training and technology. The company’s heavy equipment operators have monitors built into their machines that turn green when they’re operating the equipment correctly and red if they are not. “If it turns red it forces you to stop. This can happen if the attachment might not be level or is too high off ground,” Aquilino says, adding that in the summer much of the newer equipment has various safety features to minimize improper operation. Outdoor Pride also invests in a range of personal protective equipment. “This isn’t just for people’s ears and eyes. We also have cut-proof gloves and a rule about no loose garments,” he says. “We call it look good work good.”
This increased focused on safety is one reason the NH Insurance Department approved a 5.6% loss-cost rate reduction for workers’ compensation starting Jan. 1, 2025—the 13th reduction in as many years. A loss-cost rate, which affects workers’ compensation premium rates, is the portion of an employer’s insurance premium dedicated to covering claims costs for work-related injuries. The rate is determined by the money needed to cover claims and related expenses for an insurance company and is one factor contributing to the overall cost of premiums. Other factors include payroll size, the industry itself, safety credits earned by companies, the type of job, and a company’s claims history.
Gregory Jamison, senior vice president of underwriting for MEMIC, or the Maine Employers’ Mutual Insurance Company, based in Portland, Maine, says workplace technology has made many jobs safer. MEMIC has a total of 451 active insurance policies for businesses in NH ranging from light manufacturing to private education and hospitality totaling $12.5 million in written premiums.
The biggest determinant for a reduction in loss costs over the past decade or more is the reduction in claims, Jamison says. “Some of this could be attributed to the lockdown during COVID, but a downward trend in frequency has been occurring before 2020 and after 2021,” he adds.
A Unique Line of Insurance
Unlike general liability insurance, workers’ compensation insurance is regulated by the NH Insurance Department, which works with the National Council on Compensation Insurance (NCCI) to set rates. NCCI is a ratings bureau specializing in workers compensation that provides insurance ratings and industry trends analysis.
Workers’ compensation is a unique line of insurance in many ways, says Jeff Eddinger, senior division executive for NCCI. One reason for this, he explains, is that there are more than 600 individual job classifications. NCCI analyzes data in NH and 37 other states and then makes their rate filings in those states.
Christian Citarella, an actuary with the NH Insurance Department, says consistently lower loss costs are a strong indicator of safer work environments and faster recovery times for injured workers. “The trend of declining workers’ compensation medical expenses, combined with the proactive safety measures embraced by employers and employees alike, continues to drive these favorable outcomes,” he says.
Workplace Injuries Declining
Nationally, private industry employers reported 2.6 million nonfatal workplace injuries and illnesses in 2023, down 8.4% from 2022, according to the U.S. Bureau of Labor Statistics. “This decrease was driven by a 56.6% drop in illnesses to 200,100 cases in 2023, the lowest number since 2019,” the Bureau stated in a Nov. 8 release. “There were 946,500 nonfatal injuries and illnesses involving days away from work in 2023, 20.1% lower than in 2022.”
While historically, fatal workplace injuries are down, there has been a recent uptick. Worker deaths in America are down on average, from about 38 worker deaths a day in 1970 to 15 a day in 2022. Worker injuries and illnesses are also down—from 10.9 incidents per 100 workers in 1972 to 2.7 per 100 in 2022, according to the Occupational Safety and Health Administration.
However, there were 5,486 fatal work injuries recorded in the United States in 2022, a 5.7% increase from 2021, according to the U.S. Bureau of Labor Statistics, with transportation incidents accounting for 37.7% of workplace fatalities. Despite consecutive increases in 2021 and 2022, transportation incidents were still down 2.6% from pre-pandemic levels in 2019, according to the Bureau. Deaths due to exposure to harmful substances or environments increased 5.1% in 2022 and led to 839 worker fatalities, which was largely due to the increase in
unintentional overdoses.
In NH, from 2000 to 2019 there were 295 work-related fatalities in NH, with 14 occurring in 2020, according to the University of NH’s Institute on Disability. Workers’ compensation benefits paid dropped between 2012 and 2020, from $231.2 million to $201.7 million. D.J. Bettencourt, commissioner of the NH Insurance Department says fewer injuries since 2012 in NH match national trends and that long-term cases of workers’ compensation are down.
“This justifies an adjustment to the loss-cost rates downward. Various state agencies across the state and the federal government have made a commitment over the past several years to work together to prioritize workplace safety,” he says. “There’s a greater attention today on training and making sure that the workplace area, whatever and wherever that might be, is safe and in proper order.”
Aquilino of Outdoor Pride says workers’ comp insurance costs for his company remains “extremely high,” costing hundreds of thousands of dollars per year despite the attention his company pays to safety.
Depending on the type of work being done, premium cost can widely differ. Premium rates in the landscaping industry range from $4.95 per $100 of payroll on the low end to $7.65 per $100 while premium rates for medical offices for doctors, dentists, chiropractors, and optometrists in NH range from $0.24 to $0.36 per $100 of payroll. For roofing contractors the range is $10.91 to $16.86, according to workerscompensationshop.com, a company that helps employers shop for quotes.
One way insurance companies determine premium costs is through safety credits based on risk ratings. Outdoor Pride has maintained an outstanding rating from its insurance company for several years, Aquilino says. The company’s insurance provider uses what is called the Experience Modification Rating (EMR), a numerical value that helps determine the cost of workers’ compensation insurance premiums. The average EMR, or the point at which a company is said to be no more or no less risky than another, is 1.0. When a company’s EMR dips below 1.0, they are considered safer than most, which translates to lower premiums.
Outdoor Pride’s EMR is below 1 and “we have been paying special attention to that rating for years because of the types of clients we work with,” Aquilino says, explaining the landscaping and snow removal company has large distribution centers, corporate campuses, and a variety of commercial real estate accounts among its clients. Outdoor Pride communicates its safety record to those clients. “Our goal was for them to be able to look under our hood and to see that we’re a company that consistently takes safety seriously,” he says. “In the snow and ice world there are a ton of hazards and safety risks. This is true for our equipment operators in the summer as well.”