What's New

Zack Hutchins
Director of Communications

July 10, 2006

Council urges approval of bill to change how some employers pay workers' comp assessments

The Business Council is urging the Governor to sign into a law a bill that would change the mechanism by which employers that obtain workers' compensation coverage through group self-insured trusts pay mandatory surcharges on workers' comp premiums.

Until 1999, most employers paid assessments based on indemnity losses, said Ed Reinfurt, vice president of The Business Council. That year, in response to a new standard issued by the Financial Accounting Standards Board, state legislators approved changing the basis of assessments to premiums for commercial carriers.

But that modification did not affect employers that participate in group self-insured trusts. This legislation is designed to provide parity for group self-insurers, Reinfurt said.

The bill would change the method of payment, but not the amount paid, he added.

"This change in how assessments are paid will provide more price stability to the workers' compensation programs offered by group self-insurers," he said. "Under this legislation, group self-insurers would pay their workers' compensation assessment for special funds through a surcharge based on premium in accordance with rules set forth by the New York Compensation Insurance Ratings Board (CIRB)."

Programs offered by group self-insurers are regulated by the state's Workers' Compensation Board (WCB), and these regulations "are extensive and provide authority to the chairman of the WCB to intervene if appropriate reserves levels are not maintained or insufficient rates charged," Reinfurt said.

Many special funds that are part of New York's workers' compensation system are funded through assessments (surcharges on workers' comp premiums) that are allocated to commercial carriers, self insurers, the state Insurance Fund, and political subdivisions. How assessments are allocated would not be changed by this legislation, and the various kinds of insurers would continue to have their allocations determined on the basis of their percentage of total indemnity payments made in the preceding year, Reinfurt said.

This legislation would provide for a separate calculation for the allocation amount apportioned to group self-insurers. This amount would be further apportioned and a specific dollar assessment levied upon individual group insurers who would then surcharge the premiums of the participants of their trust.