New York State Insurance Superintendent Eric Dinallo has ordered a 20.5 percent decrease in workers' compensation insurance rates for the fiscal year beginning Saturday.

His action was prompted by reforms in workers' comp law earlier this year, and is estimated to save New York businesses about $1 billion in the 2007-2008 fiscal year, according to the New York State Insurance Department.

The rate change announcement was made today by Gov. Eliot Spitzer, Lt. Gov. David Paterson, Assembly Speaker Sheldon Silver, Senate Majority Leader Joe Bruno, Assembly Minority Leader James Tedisco and Senate Minority Leader Malcolm Smith.

All the legislators expressed happiness at seeing the rate cut.

In March, the governor and legislative leaders announced what was called an historic agreement designed to lower the cost of workers' comp insurance while increasing the weekly benefits for workers. The governor projected then that the result would be a rate decline of 10-to-15 percent.

New York previously permitted lifetime permanent partial-disability payments to injured workers, but the new law caps payments at 521 weeks in all but the most severe cases. It also increases penalties for workers' comp fraud [NU 3/26/2007].

Under the legislation, which Gov. Spitzer made a top priority in his new administration, injured worker benefits will increase for the first time in more than a decade. Weekly benefits will increase from a minimum of $40 to $100, and the maximum will rise from $400 to $500.

"We promised that we would reduce the cost of workers' compensation as part of our effort to make New York more business friendly," Gov. Spitzer said. "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."

He added that this means "even more cost savings for employers than we expected, while increasing the weekly benefits for injured workers. I thank Superintendent Dinallo, the Legislature, the business community and the unions for their continued cooperation that has led to this result."

Superintendent Dinallo said: "Workers' compensation reform is working. The Insurance Department was assigned to implement the reforms, and we are succeeding."

"We believe that the rate reduction is fair, that the private carriers will remain profitable, and that the market will continue to be competitive," he added.

President and CEO of the Business Council Kenneth Adams said: "This is welcome news and the business community remains grateful to Governor Spitzer and the legislative leaders for their continuing efforts to drive down the costs of workers' compensation."

Special Reports /

N.Y. Cuts WC Rates 20.5%

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