Posted on 25 Jan 2013 by Neilson
New York Gov. Andrew Cuomo proposed workers compensation reform legislation in his new budget plan, a move that has support of two national insurance groups.
Cuomo, a Democrat, offered his plan as part of his 2013-2014 budget address, after having stated he would seek workers' compensation reform during his State of the State message. Among the changes proposed is one that would create a new pass-through assessment on the self-insurance community to replace the Workers Compensation Board that currently handles workers compensation assessments. And the plan would eliminate mandatory deposits into the state Aggregate Trust Fund and close it to future deposits. The ATF was intended to protect claimants whose carriers defaulted on payments, but the payments are now handled by the Workers Compensation Guarantee Fund, a memorandum issued in support of the budget document said.
A summary of Cuomos proposal said workers compensation reforms would produce savings for employers by reducing assessments and streamlining the current system. Also, a new bonding program backed with funding from the new workers compensation assessment would help 10,000 businesses in defaulted group self-insured trusts purchase liabilities.
The Property Casualty Insurers Association of America and the American Insurance Association said they support Cuomos plan, with PCI describing it as common sense. PCI describes the current assessment system, handled by the Workers Compensation Board, as cumbersome. The new pass-through system will greatly simplify the assessment process both for the Workers Compensation Board and carriers, Kristina Baldwin, PCI assistant vice president, said in a statement. This change will also significantly reduce administrative burdens and associated costs.
Eliminating mandatory ATF deposits puts an end to a requirement that places unneeded burden on the workers compensation system, Baldwin said, which will "benefit both carriers and employers without affecting the benefits of the injured worker.
Cuomos plan would simplify and strengthen the states workers compensation system, estimating the savings to employers and municipalities at $500 million, AIA said in a statement. Workers compensation assessments would see employers assessed on their pro-rata share of premiums, regardless of how they secure workers comp coverage. And the new plan would see the state issue bonds to cover $800 million in liabilities of self-insured trusts, while increasing the minimum weekly benefit for claimants from $100 to $150, AIA said.
The plan would allow the state to determine a single assessment methodology, and allow private insurers to collect the assessment from policyholders and pass it through to the state. Currently, carriers receive 14 different invoices for five separate funds annually, with the different funds using different years as the basis for their assessment, AIA said.
AIA supports the proposal to close the ATF as well as one to close the Reopened Cases Fund. The funds once had a purpose, but now just add cost to the system without significant benefits to injured workers, it said. Its time for these funds to be phased out, said AIA Northeast region vice president Gary Henning in a statement. The New York Workers' Compensation Alliance has said closing the Reopened Case Fund would cut assessments on employers by 25%, in addition to 50% cuts expected through the prior closing of the Second Injury Fund.
The top five writers of workers compensation insurance in New York during 2011 were State Insurance Fund of New York, with a 35.98% market share; American International Group Inc., with 14.33%; Liberty Mutual Insurance Cos., with 7.87%; Hartford Insurance Group, with 7.51%; and Travelers Group, with 5.06%, according to BestLink (www.ambest.com/bestlink).