WORKERS’ COMP WRITERS SEEK 1% HIKE:

The Workers’ Compensation Rating and Inspection Bureau of Massachusetts has recommended to the state Division of Insurance that average rates for workers’ compensation insurance be increased by 1.0 percent effective Sept. 1, 2005. The WCRIB’s proposed 1.0 percent increase in rates, if approved, would be the first increase for insurers since 2001, when the commissioner approved a 1.0 percent increase following a series of five double-digit decreases between 1993 and 1999 that cut rates by 58 percent. The commissioner also ordered a 4.0 percent decrease in rates in 2003.

WCRIB President Paul Meagher said he is concerned about rate levels. “Any further reduction in rates will result in an inadequate rate level that could drive more employers into the residual market and reduce market stability.”

In recent years, the residual market in the state has grown. From 1999 to 2004, close to 30,000 insureds moved from the voluntary market into the residual market, which increased its market share from 4 percent to nearly 20 percent, making the residual market the state’s second-largest writer.

Meagher maintained that in recent years, wages and medical costs have increased by nearly 40 percent–causing a “significant increase in the benefits” paid. In addition, reinsurance costs have risen and the availability of this coverage has declined, especially in the wake of the Sept. 11, 2001, terrorist attacks, Meagher said.

According to officials, the rate filing does not rely upon data from American International Group or its subsidiaries, which combined make up about 25 percent of the market. The accuracy of the AIG data has been questioned by the DOI’s rating bureau. A final decision on whether the state would accept the AIG data is still pending, requiring WCRIB to file without it in order to meet the filing deadline.