Study Finds State Workers' Compensation Rates Among Lowest in Nation
Costs to Employers Third-Lowest Oregon Survey Reports; Under Patrick Administration Rates Have Decreased over 17 Percent
The Oregon report, released last month, researched the Jan. 1, 2008, rates for the 50 top industries in that state, and found that Massachusetts' combined rates of $1.39 per $100 in payroll is the third-lowest of the 50 states and Washington, D.C., and is 62 percent of the national median of $2.26.
Under the Patrick Administration, the Division of Insurance has lowered average workers' compensation rates by over 17 percent since 2007. In addition, the state has made several other changes to the structure of workers' compensation premiums - including reducing the maximum penalty for losses from 49 percent to 25 percent, and lowering charges required to be paid by small employers - that have further improved the environment for businesses.
"The long-term reduction in workers' compensation rates in Massachusetts is one of the great success stories of the last 20 years. The average rate has decreased nearly 70 percent since 1993, which is great news for businesses throughout Massachusetts," said Nonnie S. Burnes, the Commissioner of the Division of Insurance. "We are pleased with the progress we have made, and we will continue to work to offer timely benefits to workers while minimizing the cost of workers' compensation for businesses."
The change in Massachusetts workers' compensation rates can be attributed to two major factors. Throughout the country, fewer employees are engaged in hazardous occupations, while both workers and companies have become more aware of safety in the workplace and more attuned to the importance of early return to duty, both trends that have been steeper in Massachusetts than in other states. Additionally, in 1991, the state reformed both workers' compensation benefit structures and dispute resolution practices, which have made the system less litigious and more efficient.
"From a dispute resolution perspective we are now almost 20 years post workers' compensation reform in the Commonwealth and have seen our process become more efficient as the years pass," said Suzanne Bump, the Secretary of the Executive Office of Labor and Workforce Development. "Currently, the vast majority of disputes filed with the Division of Industrial Accidents, in excess of 90 percent, are resolved within one year. This kind of timely adjudication has a direct impact on costs as workers receive benefits more timely and insurers are better able to manage case loads knowing that the system is functioning properly."
The Oregon report found Massachusetts' average rate behind only Indiana ($1.23 per $100) and North Dakota ($1.08 per $100), and to be the only New England state to fall below the national median (Rhode Island was at the national median).
"The success of the reforms of workers' compensation and the lower rates it has created is particularly good news in this economy," said Greg Bialecki, the Secretary of the Executive Office of Housing and Economic Development. "This is another enticement to the businesses that are considering moving to Massachusetts or expanding their current operations here."
The Oregon Department of Consumer and Business Services has been examining workers' compensation rates on a biennial basis since 1986. The study takes into account differences in industry composition when assessing the rates for each state.