A hearing on the proposal is set for March 30. If approved it would be the first rate change since 2010 when a 2.4 percent decrease took effect and the first increase since 2001.
The filing lists these three main drivers:
- The actual experience of insurers has continued to deteriorate. "Reported losses, both before and after development, are higher than they were last year."
- The predicted net trend in loss ratios, which takes account of changes in claim frequency and claim severity relative to changes in wage levels, is positive -- "reflecting reasonable expectations that the costs of claims will rise faster than wages." The filing says it's the "first time in seven years" that has happened.
- Less opportunity for insurers to offset underwriting losses with investment income.
The filing notes that its proposed "modest rate increases" in 2008, 2010, and 2011 "led to either rate decreases or no rate change at all. In fact, rates have not increased since 2001 when an increase of only 1 percent took effect."
The filing urges regulators "to be mindful of the environment in which our member carriers operate today," as they consider the proposal. The state provides "some of the highest benefits to injured workers, but now has some of the lowest workers' compensation insurance rates in the country," it says. "The costs of medical care -- especially pharmaceutical costs -- continue to rise, and the effectiveness of return-to-work programs continues to be hampered by the economic downturn."
Massachusetts' residual market is among the largest in the country and provides workers' comp coverage to one in four employers in the state, the filing says. If approved, the change would take effect in September.
Read more at the WorkersComp Forum homepage.
April 2, 2012
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