Governor Andrew M. Cuomo today announced that for the first time in four years, New York State employers will see a reduction in workers' compensation premium rates. The Governor asked for a reconsideration of the original recommendation in order to find ways to reduce the proposed increase.
Rates to policyholders will actually see a decrease of 1.2 percent -- the first reduction in rates since 2008. The Governor also announced that the last measures of the 2007 Workers' Compensation Reform Law, which secured necessary benefit increases for injured workers and cost reductions for businesses, have now been fully implemented by the state. The rate reduction and the expedited implementation of the reforms are a result of efforts by the Governor's administration over the past 18 months to modernize, improve efficiency and decrease waste in the workers' compensation system.
"To create jobs and get our state's economy back on track it is essential that New York's businesses remain in a competitive position to succeed in the global marketplace," Governor Cuomo said. "For years, the workers' compensation system has been too costly for businesses and ineffective for injured workers. With the new measures implemented by the state, and our continued work together with the business and labor communities, we will remain on track to create a system that works better for both employers and employees."
This year, the New York Compensation Insurance Rating Board, a non-governmental rate service organization, recommended a cost increase in their annual loss cost filing. After reviewing all filings and written submissions, the administration deemed the rate increase was not to be necessary. As a result of the decision, workers' compensation rates will actually decrease in the upcoming policy year. The rates are determined on an annual basis, and are informed by a variety of factors, including but not limited to experience in the marketplace, implementation of any cost cutting measures, and implementation of any new policies and procedures.
Benjamin M. Lawsky, Superintendent of Financial Services, said, "Under the Governor's leadership, New York has taken dramatic steps that ultimately will benefit workers' compensation insurers, claimants, and businesses -- both large and small -- throughout the state. At a time when many states are gutting their workers' compensation systems, New York is working to continually improve our workers' compensation system for employers and employees. This is the right decision on rates at the right time."
The DFS decision was due in part to a variety of developments which are altering the workers' compensation landscape, including the completion of the workers' compensation reforms. Last year, Governor Cuomo directed the Workers' Compensation Board to deliver on the components of the reforms and implement any outstanding provisions. Although the savings from the reforms were immediately realized by businesses, the implementation of the measures supporting those savings proceeded at a slower pace. The January 1, 2012 release of the Guidelines for Determining Permanent Impairment and Loss of Wage Earning Capacity and the recent adoption of diagnostic testing network regulations marked the completion of the reform.
Having finished the process for capping the number of years certain benefits are paid, instituting medical treatment guidelines and improving the calculation of loss-of-wage earning capacity, the Workers' Compensation Board will now focus on creating comprehensive guidelines for the treatment of chronic pain and modernizing its systems using technology and industry best practice to speed benefit delivery, improve service to injured workers, and reduce waste, fraud, and abuse by employers, medical providers, and employees in the system.
Mario Cilento, President of the New York State AFL-CIO, said, "The Labor Movement's priority in the 2007 Workers' Compensation reform was to ensure that workers who suffer injury or illness while at work receive the timely treatment they need and adequate benefit levels to support themselves. The reform led to the indexation of the benefit at two-thirds of the state's average weekly wage so that never again would injured workers suffer an erosion of their benefits through inflation. I thank Governor Cuomo for finally implementing these reforms thereby ensuring that the benefit levels remain indexed and injured workers receive essential care. The New York State AFL-CIO will continue to work with the Administration to ensure that the system is appropriately funded and administered to serve injured workers and pay their benefits."
Heather Briccetti, President and CEO of the New York State Business Council, said, "The 2007 legislation was a good faith effort to balance benefit increases, reduced employer cost, and improved claims administration. Five years after the 2007 reforms, we need to evaluate its actual impacts on both benefits and costs. The cost of workers' compensation coverage remains a significant competitiveness issue for New York State business, and we look forward to working with the Administration and other stakeholders on next steps in improving the system."
Robert Beloten, Chair of the Workers' Compensation Board, said, "Prior to the reform, lost wage benefits were insufficient for injured workers yet the system has had uncontrollable medical and indemnity costs. It was an unsustainable system that did not work for the employer or the injured worker. Working with business and labor we have put this system on a more sustainable path. We will continue to work with our key stakeholders to improve benefit delivery and weed out waste, fraud, and abuse in the system."
Peter M. Rivera, Commissioner of Department of Labor, said, "Improvements in New York's workers' compensation system is a benefit to all the hard working people in the State of New York."