Zack Hutchins
Director of Communications

For Release — September 2, 1999

Report: New York's 1999 workers' comp costs rose a bit higher above the national average
Council: New report on manufacturers' costs strengthens the case for additional workers' compensation reforms

ALBANY—An authoritative new study shows that New York manufacturers' 1999 workers' compensation costs lost some ground relative to the national average. This strengthens the case for further workers' comp reform, Business Council President Daniel B. Walsh said today.

New York's 1999 workers' comp rates for manufacturers were 12th highest among the 44 states evaluated in the study, 20.9 percent above the national average, according to a new study by Actuarial & Technical Solutions, Inc., a consulting firm based in Ronkonkoma, Long Island. The same study last year showed New York's workers' comp costs for manufacturers 20.4 percent above the national average. (Six states which provide workers' compensation insurance exclusively through a state fund were excluded from the study.);

"Our efforts to curb workers' compensation costs may be stalling," Walsh said. He noted, for example, that New York's rate service organization, the Compensation Insurance Rating Board (CIRB), has proposed a workers' comp increase of 17 percent earlier this year. That request that was eventually rejected.

"After Governor Pataki and the Legislature enacted critical reforms in 1996, costs fell, as we had predicted," he said. "But as the Governor has emphasized, there are key reforms that New York must still enact to further reduce costs and help New York compete with other states that vie for manufacturing jobs and businesses."

The study also showed that New York's wage replacement benefits are 29 percent above the national average and the nation's 11th highest.

Workers' compensation costs in New York have traditionally been far above the national average and thus a competitive disadvantage for the entire state. In 1996, sweeping reforms championed by Governor Pataki limited the ability of third parties to sue New York State employers, mandated safety programs for some employers based on safety records, created new anti-fraud protections, and helped reduce costly delays in the workers' comp system.

Earlier this year, Governor Pataki proposed two additional reforms that are long- time Business Council priorities: a cap on permanent partial disability payments and use of objective medical guidelines to determine the degree of disability in these cases. New York State is one of the few states that pays these benefits indefinitely, even years after the injured have returned to work, Walsh noted.

Cases of permanent partial disability are significant because they account for more than half of New York's workers' compensation claims costs. Only nine states have no cap on permanent partial disability cases. In three states with caps Connecticut, Florida, and North Carolina approximate costs per case ($21,000, $30,000, and $22,000, respectively) are significantly lower than New York's costs per case ($48,150). Thirty-nine other states already use objective medical guidelines to ensure consistent payments for specific injuries.

Four years ago, before the effect of the1996 reforms was felt, the analysis by Actuarial & Technical Solutions showed that New York's workers' compensation costs for manufacturers were 57 percent above the national average. By 1997, the gap had fallen to the point where New York's rates were 28.7 percent above average.

States where workers' compensation costs compare more favorably to the national average include Indiana (43.1 percent below the national average), North Carolina (34.5 percent below average), New Jersey (6.3 percent below average), and Massachusetts (at the national average).

Nationwide, the average cost of workers' compensation insurance for manufacturers fell for the fifth year in a row from 1998 to 1999, dropping 9 percent, the Actuarial & Technical Solutions study found. For the second straight year, 40 of 44 states studied saw rates decline over the year; Arizona, Oregon, Massachusetts, Utah, Oklahoma, Tennessee, and South Dakota all had decreases of 20 percent or more.

The costs of workers' compensation in the study are based on a composite payroll distribution by class for more than 60 classifications in the manufacturing sector.

Note: The report Workers Compensation State Rankings is available from Actuarial & Technical Solutions, Inc., at 516/471-8655.