WCRIB Seeking 19% Increase in Workers' Compensation Rates for ...

Proposed Rates would be 58% lower than 1991 levels says organization

The Workers? Compensation Rating and Inspection Bureau has filed a proposal with the Division of Insurance proposing an average 19.3 percent increase in rates for Workers Compensation Insurance. It is also seeing a 20.0% increase for F-Classes.

?While we recognize that the current filing calls for a significant rate increase, it reflects the real costs of providing this kind of insurance. Without a rate increase, we will be unable to maintain a competitive market for workers compensation insurance in Massachusetts,? said Paul Meagher, President of the WCRIB.

Aside from a 1 percent increase which took effect in 2001, the WCRIB says, rates for workers? compensation insurance have not increased in more than 10 years. In addition, the Bureau contends that current rates are still lower than when the workers? compensation market was reformed in 1991.

?Even if our rate filing is approved by the Commonwealth, rates will still be nearly 58% lower than they were in 1991,? adds Meagher. ?We are already seeing an increase in the number of employers who are forced to obtain coverage in through the Massachusetts.?

The WCRIB explains that the proposed rate filing is based on the actual experience of insurers providing workers? compensation coverage in Massachusetts. The higher rates reflect that actual costs of claims (los wages and medical care) and the expenses insurers bear to run their business. In addition, the Bureau highlights the following justifications for the rate increase:

• Recent trends indicate that the average cost of claims or ?claim severity? has risen steadily, even as the low number of claims overall are decreasing;
• Lost wage payments are a function of average weekly wages, which have increased 27.5 % since the last rate increase in 2001;
• Health care costs which account for 40% of the benefits paid to injured workers, have also risen steadily over the last decade;
• The costs of doing business have been increasing at the same time that insurers? opportunities to offset underwriting losses with investment income have diminished in the wake of historically low interest rates.

As a result, the WCRIB argues that if rates are held flat or further decreases are ordered, employers will continue to have fewer and fewer options available in the workers? compensation insurance market.

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Source: http://agencychecklists.com/2012/03/05/wcrates2012/

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