View this article online: https://www.claimsjournal.com/news/east/2003/09/08/32032.htm
The National Association of Independent Insurers, commenting on the decison by the Massachusetts Division of Insurance to compel insurers writing business in the state to cut rates for workers’ compensation policies by an average of 4 percent (see IJ Website Sept. 2), warned that it could be a serious mistake.
The NAII pointed out that the decision was taken “in spite of double-digit cost increases for health care and prescription drugs.” NAII assistant general counsel Gerald L. Zimmerman called it a move that “could seriously backfire if insurers writing workers’ comp decide they can no longer afford to write policies in the state. The insurance department may well be turning the workers’ comp insurance market into a replica of the ill-conceived auto insurance market that has plagued Massachusetts consumers for years.”
“The division’s decision was spurred in part by pressure from Massachusetts Attorney General Thomas F. Reilly, who originally sought a 21.4 percent decrease, claiming insurers overestimated future claims and underestimated investment income,” said the bulletin. “The attorney general’s office had not involved itself in workers’ compensation insurance rate setting in 20 years.”
The state’s Workers’ Compensation Rating and Inspection Bureau (WCRIB) had sought a 10.8 percent increase. This was later pared to an 8.6 percent increase, while the Division of Insurance’s own recommendation was a 9.9 percent decrease. The NAII noted that “The Division last considered workers’ comp premiums in 2001, when it reached an agreement with the Workers’ Compensation Rating and Inspection Bureau for a 1 percent increase, marking the only increase in a decade.” The WCRIB now has 30 days to determine whether to appeal the division’s decision to the Supreme Judicial Court.
“This is an extremely irresponsible decision in light of the fact that insurers are facing skyrocketing costs for health care and prescription drugs,” Zimmerman concluded.