New York will see a 9.3% average hike in workers’ compensation loss costs, taking effect on October 1. Businesses in New York avowedly see this hike less as a burden and more as a necessity to keep the insurance market stable after the state hiked benefits in 2007. Now, workers’ compensation insurers add their own expense and profit factors to the approved loss costs to generate rates. The Business Council of New York State said the hike is a cost of doing business as it reflects the true cost of New York’s workers’ compensation system, while urging lawmakers to enact reforms to address the factors driving up costs.
The hike is necessitated by a continued rise in the cost of claims, as indemnity costs are rising at an annual rate of about 5.3%, and medical costs at about 5.1%; while claim frequency is mostly stable. The New York State workers’ compensation system is also deeply troubled by the expensive reforms of 2007 which more than doubled maximum benefits, indexing them to the state’s average weekly wage, increased medical costs, rapidly grew costs of scheduled loss of use awards and caused extensive litigation and excessive fees paid to claimant attorneys.
Nothing but serious reform could ensure lower comp costs in the future. Computations of the loss cost level indicated an increase of 9.6% across all classifications but the state proposed only a 9.3% increase by assuming no change in the loss cost provisions for terrorism, natural disasters and catastrophic industrial accidents. Last year the state approved an average 5.9% increase in loss costs.
The new rule makes even employers working hard to maintain good safety records to avoid claims face higher rates. Interestingly, Wisconsin has just approved a 3.19% reduction for worker’s compensation rates in the state, thanks to the commitment and investment of Wisconsin employers into the health and safety of their employees through effective risk management through collaborative efforts from workers and management.
Worker’s compensation insurance is basically aimed at ensuring injured workers get medical care and compensation for a portion of the income they lose while they’re unable to return to work. Everyone wants to lower costs, but how many recognize that the only assured method to reduce costs is working to eliminate workplace accidents and developing strategies designed to lower injury rates?
Here are some best practices that can achieve this, whatever may be the industry – such as retail, wholesale, restaurants, hotels, oil dealers, home health care, residential care facilities and other industries.
The results of implementing a “safety first” culture will not just affect the workers’ compensation program, but also your organizational productivity, overall worker safety and ultimately your businesses success.
What has your company done to promote a culture of safety, helping to eradicate work comp claims?
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