Massachusetts Approves 10.2% Workers’ Compensation Rate Cut

Massachusetts workers’ compensation rates will fall an average 10.2% starting July 1, a considerably bigger reduction than the industry recommended.

Insurance Commissioner Gary Anderson signed off on the cut that will save employers an estimated $130 million after the attorney general’s office, the industry’s Workers’ Compensation Rating and Inspection Bureau (WCRIB), and the insurance department’s State Rating Bureau reached an agreement.

The WCRIB in December had filed a recommendation for a 4% reduction.

The revised rates will apply to new and renewal policies effective on and after July 1, 2023, including all policies in the assigned risk pool.

The overall experience and benefit level change is -10.2% for each industry group: manufacturing; construction; office/clerical; goods/services, and miscellaneous.

Last year the insurance commissioner approved an overall average decrease of 3.46% starting July 1, 2022. That cut was negotiated after the WCRIB recommended a 2.78% average increase.

WCRIB has posted the details of the rates to be effective July 1, 2023.

In a filing for 2023, the industry bureau typically would have relied upon policy year 2020 data, but instead it used 2018 and 2019 policy year data because it found that the 2020 data was too affected by the Covid-19 pandemic and it believed the 2018 and 2019 data would be more indicative of the current employment and economic environment.

The bureau said it expects conditions to continue to stabilize at a higher unemployment level going forward and these trends convinced it to give 75% weight to policy year 2018 and 25% weight to policy year 2019.

Massachusetts requires workers’ compensation carriers to file new rates at least every two years. Anderson has directed the industry to file new rates in December for July, 2024, so that future rates may address how business operations have changed over the past three years due to the pandemic and what the effects might be on workers’ compensation rates.

The commissioner said that it is unreasonable to assume that the 2020 data that is now characterized as anomalous will always be so.

“The Covid-19 pandemic unquestionably had immediate and significant effects on virtually all sectors of the economy and on the structure and operations of the labor force. The responses to it included developing work-from-home policies for many employees and creating new ways to ensure that medical care for some injuries could be treated in alternative settings such as telemedicine. Wide-ranging disruptions to longstanding operations could affect data reporting,” Anderson wrote.

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