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For Release — Wednesday, May 19, 2004

COUNCIL: PROPOSAL TO RAISE WORKERS' COMP PREMIUMS 29 PERCENT
IS 'STUNNING AND FRIGHTENING,' AND REINFORCES CASE FOR REFORM

ALBANY — A proposal from New York's Compensation Insurance Rating Board (CIRB) to increase employers' average workers' compensation premiums by 29 percent is "stunning and frightening," said Business Council President Daniel B. Walsh.

"It's stunning because New York State employers already pay workers' compensation costs that are 72 percent above average on a per-case basis," Walsh said. "And it's frightening because employers need rate relief, not double-digit rate increases."

The proposal comes during a legislative session in which lawmakers have not enacted workers' comp reform or acted to ease any of the other high costs of doing business—state and local taxes, energy costs, and health-insurance costs, for example—that limit New York's job growth. The Council's research affiliate, The Public Policy Institute, reported last week that New York has added few if any net new jobs since 1990 that were not funded by taxpayers.

"California has finally acted to address its workers' comp nightmare. New York must do the same—and must ease other costs of job creation so businesses, not taxpayers, can once again be New York's main source of job creation," Walsh said.

CIRB is an insurance-industry entity that each year recommends a change in workers' comp premiums and assessments. Premiums are the basic rates employers must pay to provide insurance coverage for their workers. Assessments are taxes on premiums which support the operations of the Workers' Compensation Board and special funds that are part of the workers' comp system.

Each year, the state Insurance Department considers the CIRB proposal and issues a final decision on changes in premiums in assessments. Many years, the department reduces the CIRB proposal.Last year, the Insurance Department rejected two increases proposed by CIRB, 11.2 and 2.7 percent, before increasing rates by 1.7 percent. The Department last year also approved a 10 percent increase in the assessment rate, raising it from 13 to 14.3 percent.

New rates and assessments take effect each year in October.

The Business Council has made cost-cutting workers' compensation reforms a top legislative priority this year, and there is evidence that momentum for reform is growing.

The National Council on Compensation Insurance (NCCI) in September 2003 estimated that the average cost of a workers' comp case in New York was $11,793, 72 percent above the national average.New York's costs are above average mainly because the state offers lifetime benefits in cases in which benefits are not "scheduled" in state statute. These cases account for 14 percent of claims, but more than 77 percent of all compensated injuries.

At The Business Council's Small Business Day, Governor Pataki announced a reform proposal that would cut employers' costs by 15 percent while raising maximum benefits by 25 percent. That reform package, which The Business Council is supporting, has been introduced in the Senate (S.6841-Rules). The bill would:

he Business Council is also strongly supporting a workers' comp reform bill (S.5320-Libous, A.8862-Schimminger) that would:

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