Under recently-enacted legislation, New York State has switched to a loss cost system for determining workers’ compensation rates. The New York Compensation Insurance Rating Board (“NYCIRB”) has been tasked with developing loss cost values, and each insurer will submit its own loss cost multiplier to the New York State Insurance Department (the “Department”) for approval. Previously, New York required insurers to provide the NYCIRB with each company's claims data, and the NYCIRB would recommend manual rates to the Department.
The American Insurance Association (“AIA”) believes that the new system will increase competition as rates will now be tied to each insurer's expenses, and those with lower expenses will have lower rates. Additionally, the AIA believes that this legislation, along with other major workers’ compensation reforms such as those reported in our previous posts here and here, will aid in lowering workers’ compensation premiums, which are among the highest in the nation.