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Zack Hutchins
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June 6, 2006

State to weigh proposal to increase workers' comp premiums by 7.5 percent, assessments by 6.3 percent

The state Insurance Department has scheduled a June 28 hearing in New York City to hear testimony on a proposal to increase New York's workers' comp premiums by 7.5 percent, and a tax-like "assessment" added to workers' comp bills by another 6.3 percent.

The state’s Compensation Insurance Rating Board (CIRB) has proposed increasing the state’s workers’ compensation premiums by an average of 7.5 percent. CIRB has also proposed increasing assessments that are tacked onto workers' compensation bills from the current rate of 17.5 percent to 18.6 percent, an increase of 6.3 percent.

Assessments, which are a key part of the burden of workers’ compensation costs in New York State, support the operational expenses of New York’s Workers’ Compensation Board (WCB) and various special funds supported by the comp system.

New York State's workers' comp costs are already the nation's second highest on a costs per case basis, some 86 percent above the national average, according to the National Council on Compensation Insurance (NCCI). NCCI data also show that average workers’ comp premiums in New York are 15 percent above the national average.

The Council has strongly advocated reforms that would begin to rein in those costs. In particular, the Council has supported a reform proposal advanced by Governor Pataki that would make possible a significant increase in maximum benefits offered to workers even as it reduced total employer costs.

Last month, The Business Council and 61 other business groups from around the state sent all state Legislators an "Action for Jobs '06" agenda that outlined priority issues the business community wants Albany to address in the current legislative session. That agenda includes workers' comp reforms.

New York's far-above-average costs for employers are due largely to cases in which open-ended benefits are given to workers without specific statutory schedules. These case account for 15 percent of claims, but more than 81 percent of the aggregate cost of workers' comp, NCCI data show.

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.