For the seventh year in a row, the Minnesota Department of Commerce has approved decreases in the rates that many Minnesota businesses pay for workers’ compensation insurance. Average premiums in what’s known as the Assigned Risk Plan will drop by 6.8 percent beginning in 2023 after a 7.8 percent decrease in 2022.

Although premiums vary by business type and size, the average annual premium under the Assigned Risk Plan is $1,470 so the rate decrease will save a typical business that uses the plan $100 next year.

The rate decreases for 2022 and 2023 continue a trend of nearly 10 years. “Businesses in Minnesota are safety-conscious, and safety measures have improved dramatically in the past decade,” said Julia Dreier, Deputy Commissioner of Insurance.

“We applaud the Minnesota businesses that are really paying attention to this. We’re seeing improvements in worker equipment, tools with anti-kickback mechanisms, office workstations that are more ergonomic, and even upgraded software. That leads to fewer workplace injuries and fewer claims. And with fewer claims for less severe issues, insurance rates naturally go down.”

The Minnesota Legislature in 1983 passed a law assigning Commerce oversight of the Assigned Risk Plan, the provider of last resort for Minnesota businesses that are required to carry workers’ comp insurance. Workers’ comp pays medical expenses and lost wages for employees injured while on the job. In 2021, a total of 20,816 policies were written under the plan. That represents 3.6 percent of the overall workers’ comp market in Minnesota.

The rest of the market in Minnesota is underwritten by private insurers or by employers themselves through self-insurance. Their rates are influenced by the same safety and claims trends that prompted Commerce to approve lower rates for the Assigned Risk Plan. Every year, an industry advisory group called the Minnesota Workers’ Compensation Insurance Association gathers actuarial data for both the Assigned Risk Plan and private insurers, which they use to propose rates.

“We’d be surprised if private insurers didn’t follow suit and reduce rates for their workers’ comp policy-holders, as well,” Dreier said.

Also for 2023, the insurance association made a technical change to its formula for calculating workers’ comp advisory “loss costs,” on which rates are based. The change was enabled by a bill passed by the 2022 Minnesota Legislature and brings Minnesota’s workers’ comp formula in line with other states.