The Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) today submitted to the state Division of Insurance a proposed average rate decrease of 13.4 percent for workers’ compensation insurance effective September 1, 2007.
If the WCRIB’s filing is approved, workers’ compensation rates in Massachusetts would be 64 percent less than they were in 1991 when the state’s workers’ compensation reform law was passed, according to WCRIB, which is the licensed rating organization that files rates with the Division of Insurance on behalf of insurers writing workers’ compensation coverage in Massachusetts.
Rates can go down because workplace injury claims have, according to Paul Meagher, president of the WCRIB. “From the combined efforts of insurers, employers, workers and regulators, the frequency of workplace injuries has continued to decline in Massachusetts. As a result, 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.”
Meagher credited insurers for contributing to the decrease in claim frequency “by working with employers to provide safe work environments for employees.”
However, Meagher cautioned that while the proposed decrease is good news, unchecked rising medical and pharmaceutical costs could erode the gains and lead to future rate inadequacy.
He cited another market concern. Currently the Assigned Risk Pool, which underwrites employers who cannot obtain voluntary coverage, is the second largest insurer in the state with 15 percent of the market.
Meagher also noted that the future of the federal Terrorism Risk Insurance Extension Act of 2005 (TRIEA), which is scheduled to expire on December 31, 2007, is critical to maintaining stability in the workers’ compensation voluntary market.