Mass. Residual Comp. Market Will Swell Without Rate Hike: WCRIB

NU Online News Service, March 3, 1:18 p.m. EST

A workers' compensation insurance rate hike request for Massachusetts that has drawn the fire of the state attorney general would be the first increase in nine years, said the industry group proposing it.

The Workers' Compensation Rating and Inspection Bureau of Massachusetts has asked the state Division of Insurance to approve an average rate increase of 4.5 percent effective Sept. 1.

WCRIBMA is the licensed rating organization that files rates with the Division of Insurance on behalf of insurers writing workers' compensation coverage in Massachusetts.

Yesterday Attorney General Martha Coakley said she would oppose the increase, saying that "small businesses are already struggling in these difficult economic times and cannot afford to overpay for insurance coverage."

But WCRIBMA said in 2001 when the last increase was approved it was only a 1 percent increase, and only the second rate increase since 1993.

"Even if the WCRIBMA's filing is approved, workers' compensation rates in Massachusetts would be 64.3 percent less than they were in 1991 when the state's workers' compensation reform law was passed," the organization said in a statement.

"The ongoing workplace safety efforts by insurers, employers, workers and regulators have helped drive down the frequency of injuries in Massachusetts," said WCRIBMA President Paul Meagher. "However, claim severity has continued to trend higher due primarily to the persistent increase in medical and pharmaceutical costs."

Mr. Meagher said that if medical and pharmaceutical costs continue to rise, they could result in future rate inadequacy and more employers being driven into the Residual Market. Currently the Massachusetts Assigned Risk Pool, which underwrites employers who cannot obtain voluntary coverage, is the third largest insurer in the state with 11.5 percent of the market.