The head of an insurers' trade group said today that New York Insurance Superintendent Howard Mills' decision to limit a rate hike for workers' compensation insurance to 5 percent will hurt the marketplace.
Bernard Bourdeau, president of the New York Insurance Association, said he believes that a 16 percent rate hike increase originally recommended by the state's Compensation Insurance Rating Board was needed. The board, an industry advisory panel, changed its recommendation to 5 percent following a public hearing last month.
"Eventually insurers will decide that the rates are not adequate and will decide to stop writing," said Mr. Bourdeau, who described the state's workers' comp rates as artificially suppressed.
The 5 percent hike in the average workers' comp rate paid by employers is effective Oct. 1.
Mr. Bourdeau said an inadequate rate situation hurts everyone involved as more businesses will seek coverage from the state insurance fund and reduce healthy competition among insurers.
He made comments last month suggesting that New York is headed for a California-style workers' comp insurance meltdown with rate increases exceeding 40 percent if such conditions persist.
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