An agent group praised New York's top insurance regulator today for recommending a private insurers association no longer develop workers' compensation insurance rates, and said he should replace the facility as a statistical source as well.
Their comments followed New York State Insurance Department Superintendent Eric R. Dinallo's Tuesday recommendation that instead of the New York Compensation Insurance Rating Board filing the state comp rates, they should be established by open competition among insurance carriers.
The Independent Insurance Agents and Brokers of New York said this finding was "welcome news," and called on Mr. Dinallo to dump the entire CIRB operation and replace it with the Boca Raton, Fla.-based National Council on Compensation Insurance (NCCI).
Mr. Dinallo's 54-page report studying the CIRB was mandated by the legislature in March as part of a landmark measure reforming the state's comp system. CIRB will not be authorized to perform its current functions as of Feb. 1, 2008, under the new comp law.
While the board should no longer file rates, Mr. Dinallo recommended the CIRB should "continue to collect and analyze" the data necessary to determine rates for now.
In that role, CIRB would continue to develop loss costs based on historical and projected loss experience, and carriers would use them as the basis for developing their specific rates.
In addition to stripping CIRB of its rate-making authority, Mr. Dinallo recommended restructuring CIRB to add representatives of labor, employers and the insurance department to its Governing Committee to make it more independent and transparent.
The CIRB should provide data for now, he said, because "the absence of accurate industry-wide claims data would lead to a disastrous situation for the workers' compensation insurance market, because the health and stability of the system depends on the ability of insurers to accurately evaluate the cost of workers' compensation risks."
The superintendent proposed that the department be allowed to continue to examine CIRB's performance to evaluate whether, in the long term, an orderly transition of CIRB's data-gathering duties should be transferred to another entity.
Monte Almer, the president of CIRB, said yesterday that this review was called for in the legislation, and "we are sure we can supply the department what they need in the short term and the long term to remain the rate service organization of New York State."
However, IIABNY said it strongly believes NCCI "would be the best long-term option. As the oldest and largest statistical source of workers' compensation and employee injury-related information in the United States, the NCCI has broad experience."
The agent group noted information on NCCI's Web site that it is the "licensed rating and statistical organization" for more than 30 states.
Mr. Almer said the board will work with the department to set up the new recommended rate development system, adding that the suggested system–using the board to develop data–"is what 36 other states do."
CIRB has functioned as the New York system's rate-making and data-gathering entity for 90 years, according to the New York Insurance Department.
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