Their average 29.3 percent increase having been rejected by state officials last month, workers compensation insurers in New York are trying again, this time for an average 9.3 percent increase.
Maintaining that it has responded to the concerns raised by the New York State Insurance Department when it rejected its previous filing, the New York Compensation Insurance Rating Board refiled on Aug. 6 with the lower bid.
NYCIB officials said they also met with department to discuss a new rate recommendation after the first one was defeated.
If approved, the new rates would go into effect 75 days from the date of approval.
In the meantime, a separate rate change is slated to go into effect beginning Oct. 1, 2004. Effective that date, the state assessment, unaffected by the rate filing, increases from 14.3 percent to 15.1 percent of premium.
In his July 15 decision turning down the 29.3 percent bid, New York Superintendent of Insurance Gregory V. Serio said that the data NYCIRB submitted to support its request — combined with testimony and information gathered during three public hearings — did not warrant the increase.
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 percent 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 NYCIRB’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,” Serio wrote last month. “Therefore, the filing has been disapproved and the current rate level will remain in place.”
NYCIRB had several options, including contesting the decision in court, refiling for a new figure addressing the issues raised by Serio, or doing nothing. It chose to refile.
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