Rates will rise 1.5% instead of the originally requested 6.4% on July 1st
This is just a reminder that next Friday, July 1st, worker’s compensation rates in the Commonwealth will rise by an average of 1.5%.
In December 2015, the Worker’s Compensation Rating and Inspection Bureau (WCRIB) filed an industry-wide rate filing requesting an overall average increase of 6.4 percent. Representatives from the WCRIB, the Attorney General’s Office, the State Rating Bureau, the Massachusetts Association of Insurance Agents, the Building Trades Employers Association and the Liberty Mutual Insurance Company all spoke at the public comment hearing on January 29, 2016.
After the initial public comment hearing, further hearings continued during the months of February, March and April until April 19th, when the parties informed the Division that they were submitting a proposed stipulation on the proposed rate request for approval by the Division.
The Hearing Officers, Jean F. Farrington and Stephen M. Summer, approved the hearing and, the Commissioner, Daniel Judson, all executed the Stipulated Order, on April 20th.
Under the Stipulated Order rates will rise but by a smaller amount than originally requested by the WCRIB.
Agreement for overall average rate increase of 1.5%
The Stipulated Order provides that no party will object to or appeal from an order approving the WCRIB’s general rate filing dated December 23, 2015, subject to the conditions that:
- effective for policies written on and after July 1, 2016, the overall average increase in the current average workers’ compensation rates shall be +1.5 percent; and
- the increases shall be computed according to the terms in paragraphs 3 and 4 of the Stipulation.
Selected average commission lowered in stipulation
According the Stipulated Order, Paragraph 3 of the stipulation states that an underwriting profits provision of zero percent shall be substituted for the underwriting profit provision currently existing in the proposed in Section VII-A, Exhibit 1 of the WCRIB Filing.
However, the Stipulated Order states that the selected average commission rate, excluding expense constants, as shown in Section VI-G, Exhibit 3, Line 7 of the WCRIB Filing shall be 6.27 percent rather than the 7.9 percent displayed in the WCRIB Filing.
The Stipulated Order does not give any information as to whether the scope of this reduction in average commission has any material effect on overall commissions.
Division of Insurance claims $80 million in savings for employers
The settlement also will allow rates to increase while saving employers approximately $50 million annually in Massachusetts workers’ compensation premiums. The Division further notes that the agreement avoids another $30 million in premiums as a result of the parties’ agreement to remove an experience rating offset proposal from the WCRIB’s original rate filing.
“In a time when the costs of doing business continue to be a challenge, I’m pleased that our State Rating Bureau worked convincingly to broker an agreement on this important and mandatory insurance coverage. This is an outcome that has a substantial positive impact for Massachusetts businesses,” said Daniel Judson, Commissioner of Insurance.
The maximum rate increase for any class was reduced by 15 percent
In Massachusetts, rate changes in the workers’ compensation system varies for individual classes of employment. As a result, the reduced rate increase means that the maximum rate increase for any class has been reduced by 15 percent.
With the rates now officially approved by the Commissioner, the Division says that insurers may submit “downward deviation requests” which might actually result in lower rates for some employers. Only about 50 insurers, however, currently offer such reductions, which can range from a few percentage points to over 25 percent.
More information on Rates…
The WCRIBMA has posted a link to the rates and rating values effective 7/01/2016/ They are available on the WCRIBMA by selecting Rates and Miscellaneous Values in Manuals – Rates – Rating Values.