State insurance premiums rise in FY2026 proposal; workers' compensation fund deficit being amortized

The Agency of Administration told the House Appropriations Committee on Feb. 11 that premium charges for the state’s self‑insurance funds will increase in FY2026 and that the administration is managing prior deficits through actuarial smoothing.

Nick Bramer, chief operations officer, said the state maintains three internal service funds (ISFs) for insurance: workers’ compensation; general liability and auto; and a catch‑all “all other insurance” fund. “There are amounts that we work with an actuary to set every year as sort of our required contribution to our self insurance funds,” Bramer said, adding that “the major drivers of cost there are market conditions and our claims experience.”

Why it matters: the premiums set for these funds are allocated across departments and therefore feed into the budgets of many state agencies and programs. Changes in premium rates can increase departmental operating costs and influence budget negotiations.

Bramer gave specific FY2026 figures: the total workers’ compensation premium allocation across state government is proposed at $14,400,000 — a 6.2% increase from FY2025 (he noted FY2025 itself had been down 5.1%). The general liability fund charge is also up (about 6.8% from FY2025), and the “all other” insurance category remains the smallest of the three.

Committee members asked about fund balances and past deficits. Bramer said workers’ compensation carried an accumulated deficit after several years of assumptions not aligning with claims experience; he estimated the fund peaked at about $4–5 million in deficit and was about $4.7 million in deficit at the beginning of FY2025. He said the administration is amortizing that shortfall across multiple years rather than addressing it all in a single year so as to avoid large one‑year rate shocks to departments.

On the other funds, Bramer said the general liability fund had a positive balance (about $2.2 million at the beginning of the fiscal year) and the “all other” fund had a deficit under $1 million, projected to move toward break‑even.

Bramer described unusual year‑to‑year movement in certain coverages: flood insurance costs have fallen in recent procurements, which he attributed to broader national market factors and competitive bids rather than any permanent trend.

Bramer said actuarial review and third‑party administrator transitions in prior years contributed to variance in projections. He told the committee the administration and the financial services team continue to work with actuaries to set premiums and amortize deficits.

The committee did not take formal action. Members requested written follow‑up on current fund balances and amortization plans, which agency staff said they would provide.