October 14, 2015

Michigan’s workers’ compensation system continues to demonstrate to job seekers and employers that our state has the right regulatory environment for economic growth while still protecting injured workers. The Michigan Department of Licensing and Regulatory Affairs today announced the pure premium advisory rate for workers' compensation insurance will drop by an average of 6.9 percent in 2016, a 32.7 percent decrease since 2011, saving Michigan employers an estimated $327 million. Recent reforms have stabilized Michigan’s 103-year old workers’ compensation system, ensuring the promise of compensation for injured Michigan employees.

“Our stable work comp system has helped in two key ways: ensuring injured Michiganders get the care and benefits they deserve and by contributing to Michigan’s comeback.” said Gov. Rick Snyder. “By continuing to reduce unnecessary costs, the system has become an important economic asset. These considerable business savings can free up capital and allow companies to hire more workers, increase salaries and expand operations."

The pure premium is a key factor in determining a job provider’s overall expenses for workers’ compensation and is the portion of an employer’s insurance premium that pays for the anticipated claims costs for work-related injuries. These rates are developed by comparing the losses (or claims) for a particular industry to the payroll for that industry.

The most recent comparison data shows that Michigan’s cumulative pure premium decrease of 27.7 percent from 2011-15 outpaces all Midwestern states and is second best in the country. While Michigan’s rate continues to plunge, the national average increased 11.3 percent.

“Michigan companies can use a reduction in work comp costs to invest in their employees and their business,” said LARA Director Mike Zimmer. “These decreases help us retain Michigan job providers, allow them to grow and encourage employers from around the nation to move here.”

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