Massachusetts officials will conduct a public hearing on April 3 to consider an industry request for an average 2.3 percent increase in workers’ compensation rates.
The Workers Compensation Rating and Inspection Bureau of Massachusetts, which represents insurers, submitted its filing on Feb. 29. The bureau has requested a Sept. 1, 2008 effective date for new rates.
The rates for workers compensation insurance were most recently revised last September, when a 16.9 percent rate decrease took effect.
If the WCRIB’s filing for an increase of 2.3 percent is approved, the cumulative rate decrease since 1991 – when the most recent reform legislation was enacted – would still be more than 64.8 percent, the bureau notes in its filing.
The bureau’s latest filing also requests an increase in expense constants. The proposed higher expense constants are $338 for at least $200 of standard premium (up from $318); $169 for less than $200 in standard premium (up from $159); and $68 per capita (up from $64).
In its filings for 2005 and 2007 rates, the WCRIB was required to exclude the data reported by a major carrier in Massachusetts, American International Group. Those data reporting problems have been rectified and AIG data has been included in the current filing, according to WCRIB.
According to the filing, AIG has become the largest writer of workers’ compensation insurance in the state, accounting for about 28 percent percent of the premiums written.
(As part of an early 2006 record $1.6 billion overall settlement with state and federal officials for fraud and improper accounting, AIG paid states $343.5 million for underpayment of workers compensation premiums taxes and residual market assessments. They included $57 million to Florida, $34 million to Massachusetts and $100 million to Rhode Island.
AIG was found to have improperly booked workers compensation premiums as general liability premiums from at least 1985 through 1996. One effect was to reduce AIG’s taxes and residual market payments for those years.)
The current Massachustets filing notes that the Massachusetts residual market remains one of the largest in the country, with approximately 13.9 percent of the market, making it the second largest provider, and urges approval of the 2.3 percent rate increase “to ensure that the rates remain adequate and to encourage a robust voluntary market for workers compensation insurance in Massachusetts.”
The hearing on the 2.3 percent increase will be at the offices of the Division of Insurance in Boston.
Source: Workers’ Compensation Rating and Inspection Bureau of Massachusetts
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