Hawai'i's workers' compensation insurance premiums may fall more than anticipated because of a recent agreement between the industry and the state Insurance Division.

The National Council on Compensation Insurance, which represents local workers' compensation insurers, has agreed to a 19.3 percent decrease in "loss costs," a key expense component used by insurers in setting premiums, said Insurance Commissioner J.P. Schmidt. The agreement affects premiums set to take effect on Jan. 1.

The industry last month had submitted a application requesting a 16.8 percent decrease in loss costs for next year. But Schmidt said they agreed to increase that in talks with the Insurance Division.

Hawai'i has had some of the nation's highest workers' comp rates, but rates have dropped in recent years due in part to new work-safety rules.

"We pressed them on some issued that needed additional review, and we came to an agreement that a lower number was more appropriate," said Schmidt.

The NCCI filing was the third year in a row that the Boca Raton, Fla.-based organization sought a decrease. The state Insurance Division had approved decreases totaling 18.2 percent for 2007 and 8.9 percent for 2006 due to declining claims.

Schmidt said premiums should generally follow the reduction. Insurers also take into account their administrative costs, taxes and profit margins in setting the premium rates. He said some insurers may elect to use their own loss costs in setting rates, but generally most insurance companies follow what NCCI sets.

Claim frequency has declined in recent years as employers boost workplace safety in working with the state Department of Labor and Industrial Relations and labor unions. Schmidt has also pressed for changes in workers' compensation laws at the state Legislature.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.