Loss Cost Testimony
Workers Comp Committee Update
July 6, 2016
On June 28 the Department of Financial Services held a public meeting to consider a proposed 9.3% loss cost by the New York Compensation Insurance Rating Board (NYCIRB), that insurers would use as the foundation of their rate-setting for 2017 premiums. The Business Council testified at the hearing and stated that we firmly believe that the numbers, like the rate-settings process, must reflect the true costs of the workers’ compensation system. This loss cost calculation results from an actuarially sound analysis of the actual cost of workers’ compensation benefits. Please see the attached testimony.
Making a loss cost decision based on the real costs in the system is imperative to New York employers because failure to do so undermines market stability, leading to a more limited private insurance market in the state, as evidenced by the massive growth of the State Insurance Fund’s market share (now by most measures, well above 40%). This system, left unchecked will ultimately lead to severe increases in costs for employers large and small. As such, this is not the first time that The Business Council has submitted testimony calling for the adopted loss cost to reflect reality rather than politically motivated wishes. Please see the attached article we wrote in 2013, highlighting the same issue.
As you all know, the real issues facing New York’s employers are not loss cost numbers, which are mathematically calculated by NYCIRB, but a comp system that remains deeply troubled, and that is now more expensive than before the 2007 reforms. New York’s workers’ compensation rates have dramatically risen over the last eight years, driven by increases in maximum benefits indexed to the state’s average weekly wage, increases in medical costs, rapidly growing scheduled loss of use awards, extensive litigation and a slow and inefficient implementation of reform measures meant to curb costs. Fixing the system is the only way to ensure lower comp costs into the future. Now is the time to call on the State to ignore the hyperbole of the comp lawyers, designed only to protect the status quo, and demand real reform.
As always, please feel free to contact me at any time with questions or concerns.
Director of Government Affairs
The Business Council of New York State, Inc.