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Posted on August 31, 2012
The Massachusetts Division of Insurance has rejected a proposed 18.8 percent average rate increase sought by workers compensation insurers.
Regulators did not order a decrease in rates as requested by Attorney General Martha Coakley, so workers compensation premium rates will remain unchanged for the immediate future. Premium costs will continue to vary according to the claims experience of employers and discounts offered by individual insurance companies.
The decision and order follow a five-month hearing process that included statements from the public, testimony from experts and cross examination of witnesses.
Worker compensation insurers argued that rates, which have declined 65 percent since the 1991 reform law, no longer supported the rising costs of providing insurance for workplace injuries and illnesses. Workers compensation premium rates have declined more than 25 percent since 2001, while key elements of the claims paid to injured workers have increased -average weekly wages have risen 27.5 percent and medical costs, which make up 40 percent of workers compensation claims, have skyrocketed.
The industry sought rate increases in 2008 (2.3 percent), 2010 (4.5 percent), and 2011 (6.6 percent), but regulators reduced rates or kept them unchanged in each of those years.
State regulators ruled that the evidence in the current filing did not justify an increase.
“After analyzing the wealth of data and information presented during the case, we found insufficient support for such a significant increase,” said Joseph G. Murphy, Commissioner of Insurance. “No matter which of the products we regulate, the Division of Insurance expects insurers to make a compelling case to justify their proposed rates. Our staff’s scrutiny of every proposal is thorough and detailed, and carefully balances industry solvency with fairness to consumers.”