Massachusetts Businesses to Save $75 Million in Proposed Workers Compensation Rates Under Deal Between AG Coakley, State Rating Bureau, and Insurers
Insurers had proposed 4.5% rate increase, but will now reduce current rates by 2.4% beginning in September
Rates for workers compensation insurance are set every other year in an administrative rate hearing before the Division of Insurance. Businesses in Massachusetts are required to purchase workers compensation insurance, which provides coverage for expenses and lost wages of workers injured on the job.
"The lower average rates will take effect starting this September," said Attorney General Coakley. "By lowering the cost of workers' compensation insurance, we can continue to promote job growth in Massachusetts by attracting new businesses and allowing current businesses to grow. This settlement protects insurance customers and ensures that they do not overpay for workers compensation insurance."
In this year's rate proceeding, the insurance companies sought an average rate increase of 4.5%, which would have cost employers more than $40 million in extra premium payments. The Attorney General intervened in the rate proceeding to represent the interest of ratepayers, many of which are small businesses, and vowed to block the proposed rate hike. The Attorney General worked with the State Rating Bureau of the Division of Insurance to review the industry's proposed rates, and determined that the proposal included inflated projections of losses and future costs, among other infirmities, and that rates needed to be reduced below current levels so that they would not be excessive.
The settlement reduces current rates by 2.4%, providing approximately $75 Million in savings compared to the rates for which insurers sought approval. Additionally, the workers compensation insurance companies will be required to undergo another rate review next year, so that the Attorney General and the State Rating Bureau may seek further rate reductions in 2011 as appropriate.
The settlement was submitted in the rate case today, and will need final approval from the Commissioner of Insurance.
In the rate proceeding, the insurance companies are represented by their trade group, The Workers' Compensation Rating Inspection Bureau (WCRIB). The WCRIB is the private, non-profit association of insurers, which files workers' compensation rates on behalf of member insurers with the Division of Insurance.
The Attorney General's Insurance and Financial Services Division represents the public interest in these rate trials, and advocates for fair rates for insurance customers. Since Attorney General took office in January 2007, her office has obtained over $200 Million in savings for employers and small businesses by intervening in workers compensation insurance administrative rate cases.
This matter was handled by Assistant Attorneys General Peter Leight, Alex Klibaner, Amy Gwiazda, Monica Brookman, Aaron Lamb and Glenn Kaplan of Attorney General Martha Coakley's Insurance and Financial Services Division.