From the Desk of the Director, Jeff Bush
During the recently completed renewal season, APEI added one new member, Aleutians East Borough, and welcomed back the Nondalton Water/Sewer project, which was shut down in 2011-12 and hence uninsured. No existing members left APEI, so we currently sport an all-time high membership count of 66 public entities. Although members generally saw some premium rate increases this year, these were largely offset by over $1.9 million in dividends paid out to renewing members.
Obviously we at APEI are once again pleased with the results of the renewal cycle. Nonetheless, we faced some new challenges this year that, in the future, will likely negatively impact our members. In general, the national and international reinsurance markets are “hardening,” meaning prices are rising. We hear talk that the cause is large insurance losses due to natural disasters around the world, but it could just be the natural pendulum swing of the market. World insurance markets have been “soft,” with prices either flat or declining, for several years. Whatever the cause, increased prices in the insurance industry in general mean increases to everyone, including Alaska’s public entities.
The other concern is the continuing refusal of the state government and legislature to deal with increasing medical costs in workers’ compensation claims. While most states have in place effective statutory fee structures that control medical service costs in workers’ compensation claims, our state government has, in recent years, irresponsibly retreated and allowed these medical costs to climb virtually uncontrolled. The result is, by our estimation, a more than 30% increase in medical claim costs in the last year alone, which translates into overall claim costs going up almost 25%. Some of these cost increases are already showing up in rates, but unless something is done, workers’ compensation rate increases for all Alaska employers are likely to spiral upward in future years.
I encourage you to pass along your concerns to your local legislators.