In May, the New York Compensation Insurance Rating Board, a non-governmental rate service organization, recommended an 11.7% reduction in loss cost rates. This sets the basis for workers’ compensation premiums for 2019. In July, the New York State Department of Financial Services approved the reduction which will take effect October 1, 2018.
The 11.7% reduction will result in massive workers’ compensation savings for most New York employers next year. These savings combined with the 4.5% rate cut achieved in the first year of the 2017 reforms, means overall system costs will be reduced by over a billion dollars.
The reforms passed in 2017 capped classification of Maximum Medical Improvement, curbing the astronomical costs associated with the needless delay of claim finalization. Adoption of new Impairment Guidelines for scheduled loss of use awards eliminates many unnecessary monetary bonuses associated with certain injuries and treatments, are set to start saving money.
Such reforms were long overdue for a few reasons. First and for most workers’ comp was so onerous in New York that it put all employers at a massive competitive disadvantage to their regional competitors. Also, the antiquated treatment recommendations/compensation shorted workers of newer, better treatments that cost less, get them back to work quicker, and provided better quality of life overall. Imagine how vastly different a knee surgery is today than it was 10, even 5 years ago. Now imagine having to use knee surgery standards from 20 years ago (The guidelines were last updated in 1996). Workers’ comp reform was a long time coming and will provide some relief for employers in a tough business climate.
However, there are still important steps that a large industry like trucking must take to maintain these savings. Important factors in determining risks that set rates include terrorism, natural disasters, and catastrophic industrial accidents. Safety improvements, partnerships with law enforcement agencies, commitments to clean operations all go a long way to reducing risks for New York employers and therefore result in saving for everyone.