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July 17, 2001

Cut to workers' comp 'assessments' expected to shrink overall costs

The state Insurance Department is expecting average overall workers' compensation costs to decline 1.8 percent in the year beginning Oct. 1, based on new average premiums and assessment rates the department announced July 16.

The department said it had decided to keep average premium rates level, rejecting a 0.4 percent rate increase proposed earlier this year by the state's Compensation Insurance Rating Board (CIRB).

It also said that assessments - a surcharge added to all employers' premiums - would be decreased by 2.1 percentage points, from 16.5 percent to 14.4 percent. That amounts to a decline in this rate of 12.7 percent, and it is the first cut in assessments since 1998.

Money provided by employers through assessments fund about a dozen special-purpose funds and support the Workers' Compensation Board's administrative costs.

In recent years, workers' compensation premiums have declined steadily, thanks to historic 1996 reforms championed by Governor George Pataki and strongly supported by The Business Council.

But as premiums have declined, assessments have steadily increased, nullifying much of the benefit of declines in premiums and keeping New York's overall workers' compensation costs above the national average.

Employers' actual workers' compensation costs next year will vary depending on how the state classifies their employees (based on dangers associated with different jobs) as well as the individual employer's safety records and experiences with the workers' compensation system.

The 1996 reforms 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.