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Small Businesses Take a Big Hit WIth Worker's Comp Rates

By KFBB News Team

Story Created: Mar 12, 2010 at 12:13 PM MST

Story Updated: Mar 13, 2010 at 6:07 PM MST

Most companies in the state are required to carry worker's comp insurance, but for some that coverage comes at a high price to their bottom line.

Like most businesses, the Tap House Grill is required to provide worker's compensation coverage to its employees but, says owner Richard Cronk, that comes at a heavy price to his bottom line, "anytime you have a new start-up, what you do with any profits that you make or any money that you make is you try to roll it back into the marketing. Unfortunately with the rates elevated upward, we're not able to do that."

Montana's worker's compensation rate is about 50% above the national average and according to a 2008 study published by the state of Oregon - the Treasure State ranks behind only Alaska as having the highest rates in the nation, "we took a pretty good spike in 2005-2006 and now it's actually come down," says agent Tom Sidor. That's because insurers were underestimating the cost of claims and adjusted rates upward to cover costs, "in 07, 08, 09, its about 2%down."

Sidor says construction companies typically see the highest rates because of the nature of their business and the type of injuries that occur on the job, Katie Hanning of the Great Falls Home Builder's Association agrees, "i know some types of construction guys that pay 128%. It's really difficult"

Both Hanning and Sidor say businesses can control their insurance rates by following safe working practices and helping injured employees get back to work as soon as possible, "By offering them positions in companies," Sidor says, "that in fact may not be what they were doing."

And Hanning says reporting fraud, "everybody knows that guy who's on full disability and hanging off his roof doing his roof."

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