N.Y. rating board expects net savings for employers from governor's proposal
The proposals were included in Gov. Cuomo's recent budget legislation and are being considered by state lawmakers.
While not specifying an exact amount, the board said expected cost increases should be offset by closing a couple of funds and streamlining administrative processes.
The Fund for Reopened Cases has claims transferred into it when they are at least seven years past the date of injury and at least three years past the date of the last indemnity payment. The governor has proposed closing the fund to new claims after Jan. 1, 2014.
The Aggregate Trust Fund was used prior to 2007 to ensure payments to claimants by ordering carriers to make the full present value of fatal and permanent total claims into it. The 2007 reforms expanded the mandatory ATF provision to non-scheduled permanent partial disability. The governor's proposal effectively closes it.
"As the closing of the Reopened Case Fund is expected to result in an increase in loss costs of 4.1 percent to 5.0 percent -- which will be largely offset because of the reduced Reopened Case Fund assessment -- and the increase in minimum weekly benefit are expected to result in an additional loss cost increase of 0.3 percent, the NYCIRB estimates that the original Governor's Budget Bill will result in an increase of between 4.4 percent and 5.3 percent in future loss costs," the board said. "Combined with anticipated long term savings from the elimination of the Aggregate Trust Fund, this bill is expected to result in overall net savings in employers' costs."
The governor's proposals have garnered support from two national insurance industry trade associations. The American Insurance Association said the proposals "aim to bring a number of changes to New York's workers' comp system and save New York's employers an estimated $500 million without adversely affecting workers' rights."The AIA specifically cited the "simplifying and rationalizing the assessment mechanism" as a cost-savings measure.
The current assessment system requires carriers to receive 14 different invoices for five separate funds annually. The proposal would have the state determine a single assessment methodology, "allowing private insurers to easily collect this assessment from policyholders and transmit it to the state."
The Property Casualty Insurers Association of America said the proposals will have a "positive impact on costs by streamlining processes and addressing some of the issues that have prevented the reforms of 2007 from achieving their intended long-term savings."
Read more at the WorkersComp Forum homepage.
April 18, 2013
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