N.Y. Regulator Slammed Over Comp Freeze

The Albany, N.Y.-based NYIA said Mr. Serio's decision to freeze rates at current levels could chill the marketplace stifling competition and impeding economic recovery.

Joanna Rose, spokeswoman for the superintendent, said the department is "very confident we made the right decision."

Mr. Serio announced that the rate hike was not supported by information submitted with the filing and at a recent public hearing. His announcement called the rating board's methodology flawed and said it had not provided backup information requested by his department.

He added that the board had failed to factor in legislation to rein in costs.

But Bernard Bourdeau, president of NYIA, said that the savings from workers compensation reforms enacted in 1996 "were fully reflected in the rate filing."

Mr. Bourdeau forecast, "Ignoring insurers' needs for adequate rates in the face of visibly higher costs paves the way for a potential crisis in the marketplace."

According to Mr. Bourdeau, medical costs are growing by eight to nine percent per year and wage replacement costs for injured workers are growing seven percent annually.

He commented that "in a rate suppressed environment, insurers will be reluctant to write more coverage, driving up insurance costs in the long run and stifling the anticipated economic recovery of New York."

In addition, the loss of a robust workers' comp marketplace in New York could result in unmanageable growth in the State Workers Compensation Insurance Fund, he added.

The New York Insurance Association is a trade association of property-casualty insurance companies that provide insurance coverage for autos, homes and businesses throughout New York State.