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July 18, 2005
State Insurance Department approves 5 percent increase in average workers' comp premiums
The state Insurance Department has approved a 5 percent increase in the average workers’ compensation premium for the 12-month period beginning October 1.
The state’s Compensation Insurance Rating Board (CIRB) had requested an increase of 16.1 percent in average premiums.
Assessments, a tax added to premiums that supports special-purpose funds and the staffing of the Workers’ Compensation Board (WCB), will also increase, from the current rate of 15.1 percent to the new rate of 17.5 percent.
In testimony submitted to the Insurance Department earlier this month on the proposed increase, The Business Council argued that the proposal showed again the pressing need for cost-cutting reforms to New York’s workers’ compensation system.
“We know why our costs today are high, and we know what reforms will begin to correct the problem,” the Council’s testimony said. “We know that we can give increase benefits that New York offers to injured workers and, with the right reforms, still reduce employers costs."
New York’s workers’ compensation costs are 72 percent above the national average on a costs- per-case basis, statistics from the independent National Council on Compensation Insurance (NCCI) show. This above-average cost imposed on employers is due almost exclusively to cases for which open-ended benefits are given to workers without specific statutory schedules.
These case account for 14 percent of claims, but more than 77 percent of all compensation costs.
Reform ideas that would help rein in costs include:
- Expanding the types of injuries for which benefit levels are
scheduled in accordance with the severity of the disability.
- Reducing the surcharges now imposed on employers’ premiums,
called assessments, by adjusting the calculation used to determine
- Limiting, to 10 years, the duration of benefits given to injured
or sick workers in cases in which benefits are not prescribed
by statutory schedules. The goal is to give workers both ample
benefits and sufficient time to seek retraining to return to work.
- Providing for Social Security and pension offsets—that
is, reductions in workers’ compensation benefits applied
when workers receive Social Security and/or pension benefits.
- Giving injured workers only half of remaining scheduled benefits
if they return to work before scheduled benefits expire.
- Implementing meaningful objective medical guidelines to determine the degree of disability and the ability of workers receiving benefits.
A 2004 Business Council survey of New York State employers showed that workers’ comp costs are one of the most damaging burdens holding back New York in its pursuit of prosperity.
Survey respondents overwhelmingly said their workers’ compensation costs have increased in the last five years, and that these costs limit employers’ opportunities to grow, hire new workers, and sustain other business investments.
In fact, more than a third of respondents to the survey said New York’s workers’ compensation costs are encouraging them to consider re-locating their business out of state. And about one in five respondents said these costs are forcing their businesses to either leave the state or expand elsewhere.