Massachusetts Strikes Down 18.8% Workers’ Comp Rate Hike Proposal

By | August 31, 2012

Massachusetts Division of Insurance announced Thursday that it has rejected a request to raise the state’s workers’ compensation rates by 18.8 percent.

Massachusetts regulators’ decision to strike down the request and keep the rates unchanged came after a five-month public comment hearing process.

The rate hike request was made in March 2012 by the Worker’s Compensation Rating and Inspection Bureau of Massachusetts (WCRIB), on behalf of its members. The WCRIB submitted a filing for worker’s compensation rates to be effective Sept. 1, 2012.

The WCRIB, in its initial filing, sought an overall rate hike of 19.8 percent, a recommendation that was later — as a result of correcting an error in a tax value — reduced to a recommended increase of 18.8 percent.

The WCRIB acknowledged that it was seeking a significant increase in average rates, but it argued that an increase is necessary, partly because rates have not risen since 2001.

Speakers at the public comment hearing included a representative of each party and individuals appearing on behalf of the Massachusetts Association of Insurance Agents, the Building Trades Employers’ Association and its affiliated trade groups, the Associated General Contractors of Massachusetts, the Massachusetts Chamber of Commerce, the Greater Boston Chamber of Commerce, Risk Metrics Corporation, Liberty Mutual Insurance Company, Associated Industries of Massachusetts and the Charter Group of Insurance Companies.

Massachusetts Attorney General Martha Coakley opposed the WCRIB’s proposed rates and instead recommended a decrease of 8.5 percent. The State Rating Bureau also opposed the proposed increase but made no alternative overall recommendation.

In its announcement Thursday, Massachusetts Division of Insurance stated, “We conclude, after reviewing the evidence on specifically contested issues, that the evidence does not support approval of the rate increase requested in the filing. We also conclude that the record is insufficient to support a rate decrease.”

“We therefore disapprove the WCRB’s 2012 filing,” regulators stated. “The WCRIB may…submit for approval a new filing that conforms to the findings in this decision on disputed issues and relies on appropriate data. In addition, we decline to exercise our authority to order a rate reduction at this time.”

The full announcement and detailed analysis of the decision can be found on the Massachusetts Division of Insurance website (a PDF file).

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