Workers compensation insurance rates to drop

Lewiston Porter Sentinel, July 14, 2007

Here’s some good news for cost-weary businesses in New York: it’s finally going to be easier to operate and function in the Empire State.

Gov. Eliot Spitzer and state officials announced this week that rates for workers’ compensation insurance will decline by more than 20.5 percent and save New York businesses about $1 billion in the 2007-2008 fiscal year. The rate drop stems from the historic reform of the Workers’ Compensation Law earlier this year.

Based on a careful analysis of the impact of the reforms and market trends, New York State Insurance Superintendent Eric Dinallo has ordered a 20.5 percent decline in workers’ compensation insurance rates for the fiscal year beginning July 15. In March, when Spitzer and state legislative leaders announced the historic agreement designed to lower the cost of workers’ compensation insurance while increasing the weekly benefits for workers, it was projected the result would be a rate decline of 10 to 15 percent.

“We promised that we would reduce the cost of workers’ compensation as part of our effort to make New York more business friendly,” said Spitzer. “I’m proud to say that the reforms we instituted have already produced the biggest single year decline in workers’ compensation rates since at least 1975, the first year for which data is currently available. That amounts to even more cost savings for employers than we expected, while increasing the weekly benefits for injured workers.”

The news brought words of praise from area state legislators of both major parties. “Today’s announcement that workers’ compensation insurance rates in New York state are set to drop by more than 20.5 percent is unprecedented good news for Western New York’s economic future,” said Sen. George Maziarz, R-C 62nd District, Newfane, who sponsored the workers’ compensation reform measure in the Senate. “As we lower the cost of doing business, we’ll begin to see more companies staying and growing here, more jobs being created here, and more young people staying here.

“When you look at the dollar figures, these premium decreases are going to open up even more opportunities than we expected. One billion dollars in savings for businesses -- that’s real results. That’s $1 billion that can now stimulate new economic activity.”

Assemblywoman Francine DelMonte, noting the earlier state estimates, added, “Today our expectations were exceeded – workers compensation rates will drop by more than 20 percent. It’s a great step forward to help reduce the high cost of doing business in New York.”

Known as the 2007 Workers’ Compensation Reform Act, the measure includes a number of reforms designed to substantially decrease costs, increase workers’ weekly benefits and improve system performance. The reform package:

•Increases maximum weekly benefits by 75 percent for injured workers, but still lowers employer costs significantly by creating fair limits on the benefit duration.

•Eliminates the Second Injury Fund, which creates stronger incentives for carriers and employers to control risk, reduce claim frequency and settle cases at reduced cost.

•Speeds resolution of disputes and lowers the costs of administering the workers’ compensation system.

•Requires evidence-based treatment guidelines that provide more effective medical care at lower cost. Workers will recover more quickly and more completely so they can return to work earlier and be more productive when they are back on the job.

•Produces pharmaceutical and durable medical equipment, or DME, fee schedules and networks that reduce high drug and equipment charges.

•Enacts a diagnostic fee schedule and networks that will reduce the cost of MRIs, CAT scans and other tests.

•Adds tough anti-fraud provisions designed to reduce bogus claims and other misconduct.

Both Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno predicted brighter days ahead for the Western New York economy, which has been struggling for decades with poor job growth because of the high workers’ compensation rates. “It is certainly a win for our all-important business community,” said Silver. “Overall, we have taken a significant step forward in our mutual commitment to rebuild and re-energize the economy of upstate New York.”

“This legislation represents a tremendous victory for workers who will receive increased benefits, and for businesses that will see a significant reduction in premiums,” said Bruno. “The Senate has worked to reform workers’ compensation for more than a decade and I am pleased to see many of the reforms we initiated included in this legislation. I congratulate Sen. Maziarz for his hard work, the representatives of business and labor for their support, and my partners in government for delivering a result that will strengthen New York’s business climate and protect employees.”