When the National Council on Compensation Insurance recently submitted its annual rate filing calling for a statewide average 16.5 percent rate decrease, it was a shot heard round the world in the workers' compensation market. After all, since lawmakers rewrote the workers' compensation law in 2003, rates have already been reduced by roughly 40 percent. And based on the depth of those reductions, the conventional wisdom coming into this year's filing is that the savings from the reforms had likely bottomed out and that any rate change would be modest, with many in the industry predicting that NCCI's recommendation would fall somewhere in the low single digits.

But those predictions have now been shattered as insurers face another double-digit rate cut and an almost unimaginable scenario where rates have been sliced in half just four years after lawmakers signed off on a reform bill that was virtually handwritten by the industry. While the latest impending rate change is a boon for employers, the industry finds itself facing a quandary. For even as the leading market trends continue to improve, a wary industry is left wondering if it is becoming a victim of its own successes as it questions how far and fast rates could continue to fall.

That rates have fallen is no surprise since the whole purpose of a three-year battle to change the workers' compensation system was to alleviate the pressure on employers that were facing rising premiums and a scarcity of coverage. After Insurance Commissioner Kevin McCarty signed off on a 13.2 percent rate increase, lawmakers came down firmly on the side of insurers who argued that, until they stopped hemorrhaging money due to rising medical costs, litigation, and some benefits, employers would continue to pay the price for a broken system.