N.Y. Is First To Okay Terror In Comp Rate

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By Daniel Hays

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NU Online News Service, July 15, 12:58 p.m.EST?New York State will become the first jurisdiction topermit workers' compensation insurers to factor terrorism intotheir rate structures, officials said.

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"We're the first state to get anything approved to do with 9/11or terrorism- which is fitting," commented Monte Almer, presidentand chief executive officer of the New York Compensation InsuranceRating Board.

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Mr. Almer's comments today followed the announcement by theState Insurance Department last week that it would permit insurersto build "catastrophe loads" into their reserves "to better managepotential disasters and ensure continued stability in the workers'compensation system.

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The announcement by Insurance Superintendent Gregory V. Serio,said that the average workers' comp insurance rate would not changeand there will be a 1.2 percent decrease in assessments to keep therate level.

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Mr. Almer said the decrease would offset an overall catastropheload of 3 percent as percentage of premium, a figure that couldvary according to occupational risk ratings.

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The National Council on Compensation Insurance, the rateadvisory company based in Boca Raton, Fla. had recommended a fourpercent surcharge for comp policies, in the states it services, butno state has approved any to date.

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Studies by the Council are underway to provide more support fora catastrophe increase. "We're putting those together now," saidGregory Quinn, an NCCI spokesman.

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Mr. Almer said the catastrophe load percentage coincidentallytranslates to three cents. So if an insured was paying $1.50 perhundred dollars in payroll the rate would now be $1.53.

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"Hopefully this can act as a model or guideline for some of theother states," Mr. Almer said.

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Mr. Serio's announcement noted that for eight consecutive years,average workers' comp rates have been stable or decreased.

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The state in 1996 made legislative changes to prevent suitsagainst employers by manufacturers of injury-causing equipment,made workers' compensation fraud a felony and created a workers'comp inspector general.

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The New York board had sought a 9.4 percent increase last month,which was rejected. "Membership is not happy with that," Mr. Almersaid. But, membership is pleased that a catastrophe load wasapproved, he said.

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