Rates for workers’ compensation insurance in New York will decline by more than 20.5 percent, —the biggest cut in more than 20 years — saving employers about $1 billion, according to state officials.
Gov. Eliot Spitzer, joined by Assembly and Senate leaders, credited passage of reforms earlier this year for the drop.
State Insurance Superintendent Eric Dinallo ordered the 20.5 percent rate cut for the fiscal year beginning July 15. “We believe that the rate reduction is fair, that the private carriers will remain profitable, and that the market will continue to be competitive,” he said.
Dinallo said his department is implementing the reforms. Last month, the department produced an accelerated system for resolving disputed cases by the June 1 deadline. In the months ahead, he said his agency will continue to improve the system.
In March, when Spitzer and legislative leaders announced the legislative reforms that mandated efficiencies in claims handling, introduced new medical fee schedules, toughened anti-fraud provisions and raised some benefits, they projected the result would be a rate decline of 10 percent to 15 percent.
“We promised that we would reduce the cost of workers’ compensation as part of our effort to make New York more business friendly,” said Spitzer.
He said the reforms “have already produced the biggest single year decline in workers’ compensation rates since at least 1975, the first year for which data is currently available. That amounts to even more cost savings for employers than we expected, while increasing the weekly benefits for injured workers.”
Legislative and business leaders applauded the news.
“These rates make real the reforms that the Governor and the Legislature negotiated together,” Assembly Speaker Sheldon Silver said. “This historic announcement is a win for our working men and women, who are the backbone of this state and our greatest asset. It is certainly a win for our all-important business community.”
“This legislation represents a tremendous victory for workers who will receive increased benefits, and for businesses that will see a significant reduction in premiums. The Senate has worked to reform workers’ compensation for more than a decade and I am pleased to see many of the reforms we initiated included in this legislation.” Senate Majority Leader Joseph Bruno said.
President and CEO of the Business Council Kenneth Adams added his praise: “This process was well begun earlier this year with the reform deal, and this news and continuing efforts to achieve administrative reforms show that we are on a good track.”
The 2007 Workers’ Compensation Reform Act included a number of reforms designed to decrease costs, increase workers’ weekly benefits and improve system performance. The reform package:
Increases maximum weekly benefits by 75 percent for injured workers, while placing limits on the benefit duration.
Eliminates the Second Injury Fund, which supporters say creates stronger incentives for carriers and employers to control risk, reduce claim frequency and settle cases at reduced cost.
Speeds resolution of disputes and lowers the costs of administering the workers’ compensation system.
Requires evidence-based treatment guidelines that provide more effective medical care at lower cost. Workers will recover more quickly and more completely so they can return to work earlier and be more productive when they are back on the job.
Produces pharmaceutical and durable medical equipment (DME) fee schedules and networks that reduce high drug and equipment charges.
Enacts a diagnostic fee schedule and networks that will reduce the cost of MRIs, CAT scans and other tests.
Adds tough anti-fraud provisions designed to reduce bogus claims and other misconduct.
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