The Business Council supports this bill that, among other things, would extend the time in which a rate service organization (RSO) may file loss costs or other statistical information, including rating plans, with the Department of Financial Services from June 2, 2013 to June 2, 2018. This extension of the Compensation Insurance Rating Board (CIRB) reform law, passed in 2008, continues the loss cost model for the setting of workers' compensation insurance rates in New York State.
Under the law, CIRB submits industry-wide underwriting costs and losses for carriers, which serve as the basis for company-specific rate proposals. Using the loss cost approach, each commercial carrier proposes its own rate changes to the Department of Financial Services based on company specific administrative (non-underwriting) costs, giving employers the ability to shop around for lower priced carriers.
This bill would permit RSOs to continue to file loss costs and other statistical information, including rating plans, with DFS until June 2, 2018. Since the enactment of the 2008 legislation, it has become clear that the data collection and analysis services provided by RSOs, such as CIRB, are vital and essential to the health of New York's workers' compensation insurance market. Ending the collection of industry-wide data and the calculation of loss costs in New York workers' compensation market could have significant negative effects on insurer solvency, insurance availability and competition.
Additionally, the bill would extend the requirement that RSOs have public members as part of their board of governors and underwriting and actuarial committees, address the issues of vacancies in the membership of an RSO's governing body and provide for the temporary continuation in office of an incumbent appointee whose term has expired until a new appointment is made and approved. The preservation of the loss cost model structure is important to the maintenance of New York’s workers’ compensation insurance system.
For these reasons, The Business Council supports approval of S.6978.