The NY Compensation Rating Board has recently filed its annual workers comp rate filing with the Department of Financial Services (what was formally known as the Insurance Department). That filing of loss-costs is requesting a 16.9% increase for the October 1, 2013 effective date. It won’t be known until the third quarter what those loss-cost rates will be, but this is a very significant increase.
The percentage size of the increase is partially due to the fact that in 2012 the board was denied an increase so rates remained mostly flat. As medical and benefit costs continue to creep higher the statistical need for additional rate is warranted, but it’s not going to sit well with larger employers with high workers comp costs.
The rate increase is on top of a recent approval of the change in the “split point” which changes the rating methodology of an employer’s experience rating factor. That split-point change will negatively impact employers with high claim frequency resulting in a high modification factor.
The final factor impacting New York workers compensation is the changing landscape of the competition. We predict that the State Insurance Fund will soon be forced to charge the same assessment rate of 18.2% as the rest of the commercial insurance marketplace, and possible give up some of their advanced discounts. In addition, we’re seeing many commercial underwriters retreat from “loose” underwriting – meaning that there is a renewed interest in really underwriting accounts. Those employers with marginal loss experience or in higher rated classifications may find themselves with higher rates on renewal, or their carrier non-renewing.
So, what do you do?
In our opinion it’s a matter of gaining control over your workers compensation story, and your risk profile. What we mean by that is how much do you know of what’s going on inside your workers compensation program? What do the claims look like, what is contributing to your modifier, what loss control resources are you deploying to effective manage risk, when was the last time you performed a claims review? When you can answer these questions and have a game plan the better off you’ll be in convincing an underwriter (or several) that your company deserves the best pricing track available in the marketplace so you can win a competitive advantage. The problem is that most insurance brokers do not have the tools or knowledge on how to do that. We do, obviously, or we wouldn’t be recommending it! But doesn’t it make sense to improve make your account look more attractive to underwriters to get superior pricing results?
I mean, if you were looking to borrow money from investors or a bank, you’d want your financial story to be interesting and promising, wouldn’t you? The same is true for insurance; to win the pricing game, especially in a difficult market like we’re in now, you need to be an “attractive” risk to the underwriting community. And that’s what we do to achieve superior results for our clients. For more information on how we can improve your risk profile so you can gain a competitive advantage, give me a call for a no-obligation consultation.