The rate drop – set to take effect July 15 – is part of a state workers' compensation reform bill signed by Gov. Eliot Spitzer in March. One of the aims of the bill is to lower the cost of workers’ compensation insurance while increasing the weekly benefits for workers. Spitzer originally projected a rate decline of 10 percent to 15 percent.
“We promised that we would reduce the cost of workers’ compensation as part of our effort to make New York more business-friendly,” Spitzer said. “I’m proud to say that the reforms we instituted have already produced the biggest single-year decline in workers’ compensation rates since at least 1975, the first year for which data is currently available.”
Aiming to be “the Best in the Nation”
New York State Insurance Superintendent Eric Dinallo, who ordered the 20.5 percent decline, said he and other members of the New York Legislature will be working together to make continued improvements to New York's workers' compensation system, adding that he hopes it becomes “the best in the nation.”
“We believe that the rate reduction is fair, that the private carriers will remain profitable and that the market will continue to be competitive,” Dinallo said.
Kenneth Adams, president and CEO of the Business Council, commented that the higher level of savings is good news for the New York businesses community. However, Adams added that he would like to see the state's workers' compensation costs drop even further.
Meanwhile, Denis Hughes, president of the New York State AFL-CIO, said that “raising benefits for the first time in 15 years, while implementing record-setting premium reductions, has enhanced the lives of injured workers and the well-being of this state's employers.”
In addition to offering substantially reduced workers' compensation rates, state officials said that the cuts will increase the average amount paid to injured workers by 75 percent while still lowering employer costs significantly by creating fair limits on the benefit duration.
The reform package enacted by Spitzer and the New York Legislature also capped permanent partial disabilities for 10 years.