The Insurance Journal reported yesterday that the Workers’ Compensation Rating and Inspection Bureau of Massachusetts requested a 7.7 percent average rate increase late in December. The hearing will be held by the Massachusetts Division of Insurance on January 30 to determine if the rates are fair or unduly excessive. The public hearing will include representatives from a number of state and local agencies, including the Associated General Contractors of Massachusetts, the Massachusetts Chamber of Commerce, and the Greater Boston Chamber of Commerce.
Worker’s Compensation in Massachusetts
The Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) collects policy and claims information from businesses licensed to sell workers’ compensation insurance in Massachusetts. They file rates and classifications for member insurers, act as the statistician for the Assigned Risk Pool Administrator, and verify coverage for the Department of Industrial Accidents. WCRIB’s classification system is one of its most important programs. The system divides employers into different classifications based on the types of danger that are typical for those businesses. The businesses themselves are the ones that are classified, not separate positions or job profiles within the business.
Massachusetts has a history of either decreasing or maintaining the status quo when it comes to workers compensation rates, even as the cost of health care has substantially climbed over the past decade. As costs increase without an increase in requisite payments, insurance companies are less likely to write policies and the high-risk pool for workers’ compensation grows.
In 2012, WCRIB requested an 18.8 percent increase that was not approved by the Division of Insurance. WCRIB sought such a high rate increase because rates have not grown since 2001. They argued that an 18.8 percent increase would encourage a competitive market for workers’ compensation insurance in Massachusetts, as insurers will be more likely to provide lower deviations in a more competitive market. WCRIB argued that the residual market would keep growing if an increase did not take place soon. Such a steep increase, however, was found to be excessive by the Division of Insurance, particularly as there were many businesses struggling to survive in the hard economy.
Further, even if there is not a set rate increase, rates can still vary for businesses operating within the market. Elements including payroll, accident history, and the nature of the business – such as construction – can alter how much a company pays. Despite this, Massachusetts employers in the voluntary market pay, on average, the 44th lowest workers’ compensation premium rates in the nation, meaning only Utah, Nevada, the District of Columbia, Virginia, Arkansas, Indiana, and North Dakota had higher rates in 2012.
With the nation’s market stronger than it was before, there is a higher likelihood for an approved rate increase. If you have questions regarding what a workers’ compensation rate increase may mean for you, contact the Law Office of John J. Sheehan today. With over 14 years of experience representing injured workers and working within Massachusetts’ compensation system, we will be able to give you the representation you need to obtain all of your rights under the law.