A growing pain.

• Author: Shackelford, Susan
• Position: Rising costs for workers' compensation in North Carolina - Industry Overview

North Carolina's workers' compensation premiums, which all employers must shoulder, are becoming a burden.

Out of sight," Charlotte businessman Al Madsen barks about the premiums he's having to pay for workers' compensation insurance.

The president of Corporate Personnel Consultants & Temporaries, a supplier of permanent and temporary help, calls workers' comp "a real thorn in my side." Madsen expects to pay $50,000 a year in premiums to insure the 500 to 800 employees working for him in any given week -- more than double what he paid five years ago.

The increase has come despite his efforts to thwart unsafe working conditions, fraudulent claims and overuse of medical care.

Although some small employers like Madsen may be more vocal about workers' comp because of the difficulty they face getting insurance, the largest corporate employers are also fuming about rising premiums and costs. Their anger hasn't boiled over as it has in other states, probably because North Carolina's premiums ranked 47th in 1990, according to a study by Grant Thornton, an accounting firm. And according to John Burton's Workers' Compensation Monitor, only Nebraska, the District of Columbia and Indiana insurers paid out less in benefits per 100,000 workers.

Still, with the exception of taxes and health-care costs, nothing concerns as many of the state's employers as workers' comp. When the N.C. Industrial Commission held a workshop on workers' comp management in the Triad, 250 showed up, says George Laroussini, director of occupational safety for Sara Lee Corp.'s hosiery division.

Who's concerned about workers' comp? "Anybody who's paying attention," Laroussini says.

Sara Lee, No. 1 on BUSINESS NORTH CAROLINA's ranking of the state's 100 largest employers, is self-insured and pays millions in workers' comp claims in North Carolina each year. What's really costly, though, Laroussini says, is the indirect cost of injuries -- the lost productivity, the involvement of supervisors and management, the damaged product and the loss of morale.

What's more, in 1991 one in five North Carolina companies had to turn to the market of last resort -- the state-mandated assigned-risk pool, which costs 8% more than a private-sector policy. In all, 23,881 companies were in the pool in '91 -- 21.2% of the businesses operating in the state, excluding those that self-insure. Five years earlier, only 12.6% were in it. And despite increased premiums, the pool still came up 18% short of breaking even in '91.

Companies relegated to the assigned-risk pool either pose too high a risk or are too small for profit-minded insurers. In fact, about three dozen insurance companies have declined to cover Madsen's company within the past couple of years...