Industry Groups Applaud N.Y. Gov. Cuomo’s Workers’ Comp Reform Proposal

January 25, 2013

New York Gov. Andrew Cuomo’s proposal to strengthen the state’s workers’ compensation system — officially introduced on Jan. 22 as part of his 2013-2014 executive budget — is getting a positive reception from insurance industry associations.

N.Y. Gov. Cuomo speaking at the 2013 State of the State address. Photo: Office of the Governor
The American Insurance Association (AIA) announced its support this week for the governor’s plan to boost workers’ comp benefits and implement additional reforms.

The AIA said Gov. Cuomo’s proposals aim to bring a number of changes to New York’s workers’ comp system and save New York’s employers an estimated $500 million without adversely affecting workers’ rights. The AIA said the governor’s legislative proposals seek to achieve following goals:

1. Simplifying and rationalizing the assessment mechanism for the workers’ compensation system; employers would be assessed on their pro-rata share of premiums, regardless of how they secure their workers’ comp coverage.

2. Closing to new cases the aggregate trust fund and the reopened cases fund, with transfers to the aggregate trust fund ceasing immediately.

3. Issuing bonds to cover the $800 million in liabilities of the self-insured group trusts.

4. Increasing, from $100 to $150, the minimum weekly benefit for injured claimants.

“Governor Cuomo has taken an important step in reforming the workers’ compensation system, which should save New York’s businesses money,” said Gary Henning, AIA’s Northeast region vice president. “AIA applauds the governor for his proposal and looks forward to working with the legislature towards meaningful reform.”

Governor Cuomo’s proposals are designed to simplify the workers’ comp system by having the state determine a single assessment methodology, allowing private insurers to easily collect this assessment from policyholders and transmit it to the state, Henning said. Currently, carriers receive 14 different invoices for five separate funds annually, with the different funds using different years as the basis for their assessment.

“AIA’s member companies, private insurers providing workers’ compensation coverage, recognize that New York’s current system creates unnecessary administrative burdens and costs,” said Henning. “Gov. Cuomo’s proposals seek to streamline the process, allowing insurers to better serve the needs of the policyholder.”

The AIA said it supports Gov. Cuomo’s proposals to close the aggregate trust fund and the reopened cases fund. While these funds may have served a purpose when originally instituted, they now simply add costs to the system without providing any benefits to injured workers. “It is time for these funds to be phased out,” said Henning.

The Property Casualty Insurers Association of America also welcomed the new proposals. The PCI said Gov. Cuomo’s plan to reform workers comp as outlined in his budget address this week is a positive step forward and should help bring down costs.

“Gov. Cuomo has made workers compensation reform a priority and has shown a commitment to ensuring that the system works for employers and the workers,” said Kristina Baldwin, assistant vice president for PCI. “Several of the proposals outlined in the budget address will have a positive impact on costs by streamlining processes and addressing some of the issues that have prevented the reforms of 2007 from achieving their intended long-term savings.”

Baldwin also noted that the governor’s proposals include replacing the current Workers Compensation Board assessment process with a simple pass-through assessment system. The current system requires the Workers Compensation Board to mail 14 different invoices per calendar year for each carrier writing workers compensation insurance, she said.

“The new pass-through system will greatly simplify the assessment process both for the Workers Compensation Board and carriers,” said Baldwin. “This change will also significantly reduce administrative burdens and associated costs.”

Baldwin also welcomed the proposal to eliminate mandatory deposits to the Aggregate Trust Fund (ATF) and close the fund to new deposits. “Required ATF deposits add unnecessary costs and burdens to the workers compensation system and eliminating this requirement will benefit both carriers and employers without affecting the benefits of the injured worker,” she said. “PCI applauds Governor Cuomo for including these important, common sense reforms to New York’s workers compensation system in his proposed state budget.”

Topics New York Workers' Compensation

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