Aug 10, 2017

Revised WC loss costs take effect Oct. 1

In May, an application for an overall loss-cost decrease of 4.5 percent was submitted to the New York State Department of Financial Services by the New York Compensation Insurance Rating Board. The NYDFS approved the application as requested with an effective date of Sunday, Oct. 1.

The approval includes a premium reduction for policies with effective dates between Oct. 1, 2016, and Sept. 30, 2017, to reflect the cost impact of the 2017 Workers’ Compensation Reform. (See Part  NNN,  Subpart F,  Section 3, of  the  enacted  2017 New  York  State  Budget  Chapter 59.) As detailed in Bulletin 2439, reductions begin at .8 percent for policies with an Oct. 1, 2016, effective date and increase to a maximum of 1.7 percent for policies with an April 1, 2017, effective date or later (through Sept. 30, 2017).

There is no change in deductible-premium credits, the loss costs for terrorism, the loss costs for natural disasters and catastrophic industrial accidents and the Workers’ Compensation Security Fund surcharge. All remain at 0 percent. However, the United States Longshore and Harbor Workers Coverage percentage is changed from 48.8 to 61.1.

Individual classifications. Although the average change in classification loss costs is -4.5 percent, changes to individual classification loss costs can vary significantly either upward or downward. The NYCIRB has released Bulletin 2438 containing the new loss costs by classification and a comparison by classification between the new loss costs and the 2016 loss costs. For example, Building Raising or Moving (Code 5703) jumps 22.8 percent, while Tool Mfg. NOC (Code 3113) drops 29.3 percent.

Loss-cost multipliers. NYCIRB only publishes the loss costs, and the final rates must be developed by insurers applying their individually approved loss-cost multiplier. The multiplier reflects the insurer’s anticipated profit and expenses unrelated to loss adjustment. Each carrier must determine and file their own expense constants, minimum premiums for each employment classification, the maximum minimum premium and tables of premium discounts. 

Insurers that have loss-cost multipliers currently approved by the NYDFS do not have to refile in order to utilize the Oct. 1, 2017, loss costs. Each insurer’s current multiplier can be viewed on the NYDFS website.

Assessments. The 2013 Business Relief Act simplified the billing and collection of assessments. By Nov. 1, 2013, and every year thereafter, the Workers’ Compensation Board will publish an assessment rate as a percentage of premium to be used by all payers beginning Jan. 1 of the upcoming calendar year. All statutory assessments will be combined into this single assessment, except for the so-called "self-insurers’ assessment." The current assessment charge of 12.2 percent is applicable through Sunday, Dec. 31.

Benefits. The weekly maximum-wage benefit increased from $864.32 to $870.61, effective July 1. This benefit amount is set at two-thirds of the New York state average weekly wage, calculated for 2016 and reported by the Department of Labor on March 31, to be $1,305.92.

Rating elements. The maximum average weekly remuneration for executive officers, sole proprietors and partners remains at $2,050. The maximum remuneration for nonexecutive officers increases from $5,475 to $5,500. Minimum remuneration amounts remain at $675 for executive officers, sole proprietors and partners. It remains at $350 for not-for-profit executive officers.

Payroll-limitation program. The payroll cap under the New York Workers’ Compensation Construction Employment Payroll Limitation Program increased from $1,296.48 to $1,305.92 per week for policies with effective dates on and after July 1. According to provisions in the 2007 Workers’ Compensation Reform Act, this limit is adjusted every year based upon changes in the average weekly wage as calculated by the Department of Labor. The differential remains at 0 percent for all three territories.

Experience-rating plan. The formula for determining the experience modification factor includes entries for "primary" actual and expected losses and "excess" actual and expected losses. Primary and excess losses are separated at a "split point." The "split point" will change from $16,000 to $16,500, effective Sunday, Oct. 1. Potentially more claims will cross the primary-loss threshold. Individual employers may see a change in their factors and premium, depending on the number of claims they have that exceed $16,000. In addition, rating values for use with the New York Experience Rating Plan have been revised, as provided in Bulletin 2440.