N.Y. Comp Hike Proposal Provokes Outrage
NU Online News Service, May 21, 3:52 p.m. EDT?A proposed 29 percent hike for the average New York workers' compensation premium has come under attack from a business trade group.[@@]
The suggested rate increase has been advanced by the Compensation Insurance Rating Board (CIRB), an insurance industry advisory group that each year recommends a change in workers' comp premiums and assessments. The Board said it has recommended a 29 percent workers' comp rate hike this year because claims have been outpacing premium revenues.
In reaction, Daniel Walsh, president of the Business Council of New York State Inc., based in Albany, blasted the CIRB's proposal, calling it "stunning and frightening."
"It's stunning because New York State employers already pay workers' compensation costs that are 72 percent above average on a per-case basis," Mr. Walsh noted. "And it's frightening because employers need rate relief, not double-digit rate increases."
Eric Mangan, spokesman for the New York State Insurance Department, told National Underwriter that he can't comment on how the proposal is being received by Insurance Superintendent Gregory V. Serio, who has the sole authority to accept or decline such rate increases in the state. Mr. Serio is required to announce his decision 60 days before October 1st, the date when any new rate changes would take effect.
Mr. Mangan did note that the Compensation Insurance Rating Board in 2003 also submitted a bid for a similarly high rate hike of 11.3 percent, but that Mr. Serio had rejected that proposal and instead approved a 1.7 percent increase.
"I will say that this year's review will go through the same process and scrutiny as last year's," Mr. Mangan said. "The review will include a comprehensive analysis of the data provided by New York's Compensation Insurance Rating Board."
Meanwhile, some government and business sources who are familiar with the state's workers' comp system said they expect Mr. Serio to rebuff CIRB's proposed hike, as he did last year, by ruling that insurers have not adequately documented their case.
Mr. Mangan from the New York State Insurance Department also added that what's important to take away from the CIRB's request is that reforms are urgently needed to improve the workers' comp system in New York.
"I like to point out that the CIRB's request highlights the fact that additional workers' comp reforms are needed in New York state. That's why Gov. George Pataki is pushing reforms to lower workers' comp expenses," he said.
Mr. Mangan noted that Gov. Pataki announced a reform proposal last March that is projected to cut employers' workers' comp costs by 15 percent while raising maximum benefits by 25 percent. That reform package, which has been introduced in the state Senate, would:
? Limit the duration of benefits in cases where the level of benefits is not defined by statute.
? Cut surcharges now imposed on employers' premiums, called assessments, by adjusting the calculation used to determine assessments. Currently, assessments are based on 150 percent of the previous year's disbursements from a special fund. The proposed change would lower that rate to 125 percent.
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