Brooklyn's Progress
August/September 2005

NYS Insurance Department Superintendent Howard Mills approved on July 15, 2005 a 5 percent increase in the average workers’ compensation rate paid by New York State employers for one year beginning Oct. 1, 2005.

The increase comes in the wake of the New York Compensation Insurance Rating Board’s (CIRB) request for a 16.1 rate increase, which was the subject of a June 27, 2005 public hearing. The CIRB serves as the advisory rate service organization for workers’ compensation in New York State.  Following the public hearing, the board amended its recommendation, calling for a 5 percent boost.

“Our Chamber Member surveys show that workers’ comp costs are one of the main obstacles to business growth,” said Kenneth Adams, Brooklyn Chamber of Commerce President.  “Survey respondents overwhelmingly said their workers’ compensation costs have increased in the last five years, and that these costs limit employers’ opportunities to grow, hire new workers and sustain other business investments.  During our Albany Lobbying trips we have stressed that any benefit increase must be accompanied by reforms to the workers’ compensation system so that program savings – and not just rate increases – help pay for it.”

Last year, former Superintendent Gregory Serio rejected a 29.3 percent hike proposed by the board because companies writing workers’ comp policies had not done enough to combat fraud.

"Any increase in the workers' comp rates eats directly into the bottom line.  You can’t pass on the expense to customers. Furthermore, it disproportionately hurts manufacturers.   This increase will further erode the business climate in New York making it harder for manufacturers to stay here," said Richard Henning, President, Belmont Metals, Inc. in East New York.

Assessments, a tax added to premiums that supports special-purpose funds and the staffing of the Workers’ Compensation Board (WCB), will also increase, from the current rate of 15.1 percent to the new rate of 17.5 percent.

Workers’ Comp increases are an issue across the board for many New York businesses.  The Business Council of New York State, a statewide business association of which the Brooklyn Chamber is a member, submitted testimony to the Insurance Department earlier this month on the proposed increase.  The Business Council argued that the proposal showed again the pressing need for cost-cutting reforms to New York’s workers’ compensation system.

“We know why our costs today are high, and we know what reforms will begin to correct the problem,” the Council’s testimony said. “We know that we can give increase benefits that New York offers to injured workers and, with the right reforms, still reduce employers costs."

New York’s workers’ compensation costs are 72 percent above the national average on a costs- per-case basis, statistics from the independent National Council on Compensation Insurance (NCCI) show. This above-average cost imposed on employers is due almost exclusively to cases for which open-ended benefits are given to workers without specific statutory schedules.

These case account for 14 percent of claims, but more than 77 percent of all compensation costs.

According to The Business Council, reform ideas that would help rein in costs include:

• Expanding the types of injuries for which benefit levels are scheduled in accordance with the severity of the disability.
• Reducing the surcharges now imposed on employers’ premiums, called assessments, by adjusting the calculation used to determine assessments.
• Limiting, to 10 years, the duration of benefits given to injured or sick workers in cases in which benefits are not prescribed by statutory schedules. The goal is to give workers both ample benefits and sufficient time to seek retraining to return to work.
• Providing for Social Security and pension offsets—that is, reductions in workers’ compensation benefits applied when workers receive Social Security and/or pension benefits.
• Giving injured workers only half of remaining scheduled benefits if they return to work before scheduled benefits expire.
• Implementing meaningful objective medical guidelines to determine the degree of disability and the ability of workers receiving benefits.