August 24, 2001
(617) 521-7333

Commissioner Ruthardt Rejects Eastern Casualty Rate Request, Invites Insurer To Amend Filing

(BOSTON, MA) Massachusetts Insurance Commissioner Linda Ruthardt today rejected the 11.6% workers' compensation rate increase requested by Marlborough-based Eastern Casualty Insurance Company. In issuing her decision, Ruthardt invited the insurer to amend its rate filing, noting that the filing and supporting evidence were insufficient in critical areas necessary to arrive at a supportable outcome. Those areas included both methodologies and data associated with loss development, trend, expenses and underwriting profit.

Ruthardt acknowledged that the Eastern Casualty rate filing represented the first by an individual workers' compensation insurer in more than 50 years, and therefore, the decision suggested a number of reasonable methodologies, not used in Eastern Casualty's filing, that could yield a reasonable rate result. The decision, however, did not direct the insurer to use the suggested methodologies if it chooses to amend its filing.

As a result of today's decision, Eastern Casualty must continue to use the rates that were approved as of September 1, 1999, when the insurer was a member of the Workers' Compensation Rating and Inspection Bureau (WCRIB). There is no deadline by which time Eastern Casualty must decide whether it will amend its rate filing.

On May 31, 2001, Commissioner Ruthardt approved an agreement between the State Rating Bureau (SRB) and the WCRIB for an overall average rate increase of 1% effective July 1, 2001. The WCRIB, which now represents insurers that underwrite approximately 90% of all workers' compensation business in Massachusetts, had originally requested a 7.7% increase in the overall average rate.