August 1, 2007
Rating board announces significant decrease in average workers' compensation premium, assessments
The state's Insurance Department has formally approved revisions to workers' compensation rates that will decrease the average employer's costs by 20.5 percent, the New York State Compensation Insurance Rating Board (CIRB) has announced.
The decision formalizes the savings achieved under the landmark workers' compensation reforms advocated by The Business Council and passed into law earlier this year.
CIRB, an insurance-industry entity that each year proposes changes to premium rates, announced a decrease in both basic rates and in the assessments on workers' compensation premiums. Assessments support the operational expenses of New York's Workers' Compensation Board and various special funds supported by New York's workers' comp system.
Rates will be cut by an average of 18.4 percent, and assessments are set to decrease from 18.6 percent of the standard premium to 15.5 percent, yielding a total average savings of 20.5 percent. The lower rates will be effective on policies with billing dates of October 1 or later.
The average decrease will vary by class. For a full table, see www.nycirb.org/rcb/rcb/rc2139.pdf.
“A rate decrease and a premium decrease is great news for New York State employers and employees,” said Business Council President and CEO Kenneth Adams. “We can now officially say that New York's workers' compensation system is no longer defined by unusually low worker benefits and unusually high employer premiums.”
Governor Spitzer's office announced last month that the average employer could expect a decrease of up to 20 percent.
"We promised that we would reduce the cost of workers' compensation as part of our effort to make New York more business friendly," said Governor Spitzer. "I'm proud to say that the reforms we instituted have already produced the biggest single year decline in workers' compensation rates since at least 1975, the first year for which data is currently available."
The state Legislature approved the historic workers' compensation reform bill in early March after many years of advocacy by The Business Council and about three months of intensive negotiations involving the Spitzer administration, legislative leaders, Business Council President Kenneth Adams, and the state AFL-CIO.
The reform law imposed limits on the duration of benefits in "permanent partial disability" cases, which had driven New York's workers' comp costs to a level that has been some 80 percent above the national average. It also increased the maximum weekly benefits available to injured workers.
In addition, the reform deal included a pledge from Governor Spitzer to pursue savings for employers through additional administration reforms. The administration reforms being sought include: the design of an expedited hearing process; implementation of factual medical guidelines to determine accurately the degree of disability in comp cases; the design of new treatment guidelines; the design of new return-to-work initiatives to help injured workers; and new training for administrative law judges who hear workers' comp cases.
The new law:
- Limits the number of years during which benefits would be available in permanent partial disability cases, which now account for a high percentage of costs in New York's comp system. The previous law allowed lifetime payment of cash benefits in all such cases. Now, based on current caseloads, it is estimated that benefits will be capped at eight years or less for more than 90 percent of cases, and that the average PPD claimant will get 344 weeks of benefits upon classification.
- Increases the maximum weekly benefit for injured workers from $400 to $600 over three years. In the fourth year, the maximum weekly benefit will become two-thirds of the average weekly wage in New York, with the maximum thereafter adjusted annually beginning in the fifth year.
- Creates new programs designed to help injured workers get workers prompt medical treatment and return to gainful employment.
- Creates strong new anti-fraud measures.
- Eliminates the Second Injury Fund, which has forced significant recent increases in surcharges that are added to all employers' workers' compensation bills.
- Continues medical services for workers whose benefits in PPD cases expire would continue.
- Provides a "safety net" would be established for cases determined to involve extreme hardship.