New York Superintendent of Insurance Gregory V. Serio today rejected the filing submitted by the New York Compensation Insurance Rating Board (CIRB) that sought an overall increase of 29.3 percent in workers’ compensation insurance rates.
Serio determined that the data CIRB submitted to support its request — combined with testimony and information gathered during three public hearings — did not warrant the increase.
In the opinion and decision, the superintendent questioned the need for such a large rate increase given the consistent level of profitability reported by the workers’ compensation industry in recent years, which reported a return of 4.1% for 2004 and 4.5 percent
in 2003. The department believes that the true rate of return for the
industry is as high as 8.1 percent.
The department also found that CIRB’s filing did not address the
effects of Section 32 of the Workers’ Compensation Law, which allows insurers to settle claims at significant savings. The department’s review of the filing also found that insurers writing workers’ compensation are not performing adequately in fighting fraud. Serio ruled that the department cannot approve the increase when companies have yet to reap the positive benefit from New York’s anti-fraud measures.
“With profitability levels remaining high, with the industry’s
repeated failure to calculate savings from compensation system efficiencies and fraud initiatives, together with other issues raised in my Opinion and Decision, the industry has not met its burden to justify this rate increase request,” Superintendent Serio said. “Therefore, the filing has been disapproved and the current rate level will remain in place.”
Reaction from CIRB was cautious. Monte Almer, CIRB president, said he has yet to discuss the decision and what to do next with his members but hoped to sometime next week.
The organization has several options, including contesting the decision in court, refiling for a new figure addressing the issues raised by Serio, or doing nothing.
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