Workers compensation insurance underwriters are asking the state to approve an average 19.3 percent rate increase, saying it reflects the “real costs” of providing the line of insurance to Massachusetts employers. According to the Workers’ Compensation Rating and Inspection Bureau, the rate hike would be the first in more than ten years and rates would be 58 percent lower than in 1991 even if the rate increase is approved by state regulators.
In advocating for the rate increase, Bureau officials say the average cost of claims, which cover lost wages and medical care associated with workplace injuries, has risen steadily while the volume of claims has dropped and note that average wages have risen 27.5 percent since 2001, when the last rate hike was approved. The Bureau said insurers need the increase to cover the rising costs of health care and wage replacement, driven by higher salaries and the longer leaves that claimants are taking. If a premium cost $100 in 1991, the current rate would be $33.21. If the new rate request is approved, that premium would rise to $39.62, according to the Bureau.
The Massachusetts Division of Insurance, which isauthorized to establish rate, monitor the solvency of insurers and approve the terms of workers compensation policies, will hold hearings on the proposal in late March. In fiscal 2011, three insurance carriers gave up their licenses to write workers compensation policies in Massachusetts while state regulators approved ten new licenses for workers compensation carriers and five existing licenses were amended to include workers compensation.
Massachusetts once had some of the highest worker compensation costs in the country, but following reforms in 1991, those costs have declined steadily, falling by two-thirds over the past 20 years.
Category: Chamber Blogs