AAI Dismayed by Report Suggesting Reduction in Mass. Workers’ Comp Rates

May 16, 2003

Alliance of American Insurers (AAI) New England Regional vice president Frank O’Brien expressed disappointment Thursday with the Massachusetts Attorney General’s reported decision to seek a 21-percent reduction in workers compensation insurance rates.

“The Alliance is dismayed that there is such a wide disparity in the calculations of the Attorney General and those of the industry,” said O’Brien. The Workers Compensation Rating and Inspection Bureau of Massachusetts has reportedly recommended an 8.6 percent increase in rates.

“If a rate decrease of this magnitude is ordered, companies that write workers’ compensation in the Commonwealth will be forced to take a hard look at the Massachusetts market and may be forced to make some tough decisions. The industry’s case is clear – rates need to increase to cover projected costs.”

O’Brien said that a forced rate reduction could result in a loss of insurers writing workers’ compensation policies and would create a flood of new applications into the Assigned Risk Pool, the state’s workers compensation insurer of last resort.

“Already, the growth of the pool is exploding,” said O’Brien. “It is now the biggest writer of workers’ compensation insurance in the Commonwealth, and a rate decrease will only exacerbate this troubling trend.

“The best market is one that is driven by competition. If this rate reduction is forced on private insurers, that competition could evaporate, and the end result would not be positive for businesses and employees in Massachusetts.”

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