The New York Workers Comp Rating Board has released and gained approval of a new assessment charge which goes into effect January 1, 2014. The Assessment is essentially a tax applied to all workers compensation policies in New York, insurers are forced to collect it and pass it onto the state. It’s important to understand that the Assessment Charge, which is buried in your premium calculation, is NOT premium and does not go towards financing risk, but is rather a tax collected by the State.
Starting 1/1/14 the new Assessment charge will be applied consistently by all insurers, self-insurers and the State Fund. The Charge is now 13.8% which is about 25% lower than in 2013, saving New York Employers about $300 million in 2014. Employers insured through The State Insurance Fund may actually see their Assessment charge increase since The State Fund has suppressed the charges down to 9.9% last year. There has been some talk about The State Fund not passing the new Assessment onto their policyholders, but no formal announcement has been made regarding that yet to our knowledge.
Earlier in the year, Governor Cuomo made it clear that he wanted the Workers Compensation system in New York to be fairer and more balanced, indicating that The State Fund may lose some of their competitive rate advantage they achieved through lower assessment charges. We’ll see how it plays out, but some of our recent client engagements are showing that The State Fund isn’t always more competitive than standard commercial insurers. We are finding that some classifications that are even in Safety Groups with The State Insurance Fund do not stand up to standard commercial insurers when it comes to price competitiveness – mainly due to certain Groups failing to produce dividends over the past few years.
For more information on how we can help your company navigate through the Workers Compensation maze, please contact us in New York using the contact box to the right, or by calling 800-287-4115.