Massachusetts officials and the state's rating bureau have agreed on an average 16.9 percent reduction in workers' compensation insurance rates, it was announced.
The figure is 3.5 points lower than the original rate filing that the Workers' Compensation Rating and Inspection Bureau of Massachusetts submitted in March. The bureau is a private non-profit unincorporated association of insurers.
Paul Meagher, WCRIB president, said the rate, which was worked out with the Division of Insurance's State Rating Bureau and the state attorney general would take effect September 1.
"The bureau believes this early resolution to the 2007 rate filing is beneficial to employers. However, there is a delicate balance between having low insurance costs and a stable market where employers have many participating insurers to choose from," Mr. Meagher said in a statement.
He added, "While this latest decrease is good news for employers, unchecked rising medical and pharmaceutical costs could erode these gains and lead to future rate inadequacy. An inadequate rate level could cause increased instability in the state's workers' compensation voluntary market, which would drive more employers into the residual market."
Mr. Meagher noted that the residual market, the Massachusetts Assigned Risk Pool, which insured 4 percent of the market in 1999, today insures 15 percent of the market, making it the state's second-largest workers' comp insurer.
He also warned, "Additional market uncertainty has been caused by the federal government's failure to address the future of the Terrorism Risk Insurance Extension Act of 2005, which is scheduled to expire on Dec. 31, 2007. As a result, workers' compensation insurers must continue to provide mandatory coverage without any assurance of a federal insurance backstop after the end of this year."
Mr. Meagher said that, going forward, the bureau "will continue to work with its committees, members, and regulators toward our shared goal of maintaining a healthy workers' compensation market in Massachusetts."
He previously reported that the comp system, due to the combined efforts of insurers, employers, workers and regulators, had seen the frequency of workplace injuries continue to decline, and overall costs for both indemnity and medical claims in Massachusetts have declined in spite of continual increases in average claim severity and medical cost inflation.
Insurers in Massachusetts, Mr. Meagher said, have contributed to the decrease in claim frequency by working with employers to provide safe work environments for employees.
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