Mass. Business To See 1% Comp Rate Cut

Businesses in Massachusetts will see an average reduction of 1 percent on their workers’ compensation insurance policies under new rates approved by the Massachusetts Insurance Division, it was announced yesterday.

News that the state’s 2008 rate-setting agreement for comp, effective Sept. 1, was completed was released by the office of Gov. Deval Patrick, which said the result of the rate-setting proceeding is a projected saving for businesses of $11 million.

The new rates, averaging 1 percent per employer, mark the ninth time rates have decreased since 1994, the announcement noted.

“This most recent rate cut balances the need to help businesses control costs with the responsibility to provide employees with appropriate benefits,” Mr. Patrick said in a statement.

“Lowering the cost of workers’ compensation insurance is very much in keeping with our larger goal of improving the state’s business climate so that we can grow the economy and create jobs,” he added.

The Workers’ Compensation Rating and Inspection Bureau (WCRIB), a private, nonprofit association of insurers, had requested a 2.3 percent increase in 2008 workers’ compensation rates. Had the WCRIB requests been approved, businesses would have seen the cost of providing compensation benefits to their employees increase by $25 million, according to the Patrick administration.

Paul Meagher, WCRIB president, said agreement between his organization, the Insurance Division’s State Rating Bureau and the attorney general was the earliest rate filing resolution “achieved in recent years” and “was due to the spirit of cooperation among all the parties.”

But, he said, “while this latest decrease is good news for employers, unchecked rising medical and pharmaceutical costs could cause instability in the state’s workers’ compensation voluntary market, which would drive more employers into the residual market, already the state’s second-largest workers’ compensation insurer.”

The settlement on rates was signed yesterday by Insurance Commissioner Nonnie Burnes and Attorney General Martha Coakley. In addition to the 1 percent average rate cut, the agreement further reduces average rates for small businesses, resulting in a statewide average rate reduction of 1.1 percent—a savings that amounts to approximately $11 million for Massachusetts employers, state officials said.

“The Division of Insurance’s objective is to ensure a fair and equitable rate that protects workers without overly burdening employers,” said Commissioner Burnes. “The 2008 rate cut offers further proof that reforms have created efficiencies within the system that continue to produce savings for businesses.”

As part of a comprehensive overhaul of the Massachusetts workers’ comp system in 1991, efficient claims management, workplace safety and return-to-work programs were increasingly emphasized. The newest reduction reflects a total rate decrease of 68 percent since 1994, officials said.