Massachusetts Weighs Workers’ Comp Rate Hike to Correct for ‘Excessive’ 2024 Cut

Massachusetts workers’ compensation insurers have filed for a 7.1% increase in average rates for industrial classes beginning July 1, 2025 — the first rate increase since 2016.

Why an increase in 2025? According to the industry, it’s because the state Division of Insurance cut rates too much for 2024.

The industry’s filing organization, the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB), says the state insurance regulator ordered an “excessive” 14.6% rate decrease beginning July 2024, a decrease that was nearly double what the WCRIB recommended (-7.6%).

That rate decrease lowered the rates “below the range of reasonable and adequate rates required,” WCRIB maintains. That decision on 2024 rates remains under appeal.

WCRIB says it warned that such a significant decrease in 2024 would lead to rates that would be inadequate as further post-COVID pandemic data emerged. The rate organization adds that if the commissioner had approved the 7.6% decrease proposed for 2024, this year’s rate filing would have been for a relatively small rate decrease of 1.0%.

“Thus, rather than being able to maintain a more modest rate decrease for two years, the data now points to a rate increase to correct for the excessive decrease ordered” by the commissioner for 2024, the rating agency argues.

The insurer group maintains that its rate indication is supposed to be reviewed by the commissioner to confirm that it falls “within a range of reasonableness” but that was not done for 2024.

The rate approval process includes hearings with testimony from WCRIB, the Division of Insurance’s own rating bureau, and the attorney general’s office.

“The outcome of this hearing has a significant positive impact for Massachusetts businesses,” said Acting Insurance Commissioner Kevin Beagan last July in commenting on the 2024 rate cut he said would save employers $87 million. Beagan said the division’s rating bureau “worked hard to demonstrate that workers’ compensation rates could be reduced further.”

The state has a new insurance commissioner. Michael T. Caljouw was appointed by Governor Maura Healey in October. This week, Caljouw announced that a virtual hearing into the new rate filing for 2025 will be held on January 14, 2025.

The last rate cut is not the only factor behind WCRIB recommending an increase. The state’s average weekly wages have increased significantly, putting upward pressure on indemnity losses.

Further, the filing for 2024 used policy years 2020 and 2021, which still reflected the pandemic’s significant impact. This latest filing uses policy years 2021 and 2022 which are less impacted by the pandemic and are “more stable and representative of the current economic and workers’ compensation system conditions,” according to WCRIB.

WCRIB files on behalf of the more than 300 carriers offering workers’ compensation in the state.