N.Y. Comp Market Heading For Calif. Crisis?

The June 28 proceedings being held by the New York State Insurance Department will consider the rate application submitted by the New York Compensation Insurance Rating Board, a non-government group that serves the state as an advisory rate service based on statistics it gathers from private insurers.

Last year, New York Insurance Superintendent Gregory V. Serio approved a 1.7 percent increase after NYCIRB originally recommended an 11.3 percent hike, which was modified to 3.7 percent after a hearing.

"You can suppress rates for a short period, but it has a cumulative effect. The businesses of the state are going to have to pay," said Mr. Bourdeau.

He went on to predict that "we are approaching a California-style crisis in this state. Continued rate suppression is just going to scare off carriers from writing this business."

Mr. Bourdeau noted that the suggested hike doesn't contemplate any rise in the benefits paid for workers' comp claims, which is something "both houses of the legislature and the AFL-CIO are pushing for." With a benefit increase, another 25 percent would be needed on top of the 29.3 percent that NYCIRB is advocating, he estimated.

Previously, he said, state-approved Workers' Comp Manual rates were high and insurers were writing below them, but as the regulator has squeezed rates, companies have stopped giving discounts.

Although Gov. George Pataki has proposed a series of revisions to improve the workers' comp insurance market, Mr. Bourdeau said they appear to be "going nowhere" in the legislature.

The department said it will hold its hearings on the proposed rate at its Beaver Street office in New York City. Details of the increase application can be viewed there or at the department's Albany office. Speakers on the proposal can sign up by calling 212 480-5262.