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Potential Increase in Workers’ Compensation Rate in Massachusetts

Massachusetts employers could face a dramatic rise in the cost of employee compensation insurance this year if the proposal is approved by state regulators. The Workers’ Compensation Rating and Inspection Bureau of Massachusetts represents companies that write workers’ compensation policies. They asked the state to approve an increase of 19.3 percent. If the proposal is approved, the rates would be in effect as of September.

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Most businesses are required to carry workers’ compensation insurance. It covers the medical treatment, rehabilitation and lost wages of employees when they are injured while at work. The Bureau claims the increase is necessary because the cost of claims continues to rise. However, the state has denied smaller proposals of 2.3 percent in 2008, 4.5 percent in 2010, and 6.6 percent in 2011.

President of the Workers’ Compensation Rating and Inspection Bureau of Massachusetts, Paul Meagher, said, “If these three small increases in rates had been granted by the Commonwealth, we would not need such a significant rate increase now.” There is concern that without an increase fewer companies will offer the insurance, which will make it harder for businesses to buy workers’ compensation policies.

The President of the Associated Industries of Massachusetts, Massachusetts’ largest employer group, said that “Private-market coverage is harder to come by because the economics of workers compensation no longer add up for insurers. The growing disconnect between costs and premiums has already prompted several insurance companies to scale back their activity in Massachusetts.”

Massachusetts worker compensation cost has fallen by two-thirds over the past twenty years following reforms in 1991. A premium that cost $100 in 1991 would currently be a rate of $33.21. If the new proposal is approved, then the premium would increase to $39.62.

The increase would be used to cover the rising cost of health care and lost wage replacement because claimants now earn higher salaries and are taking longer leaves. The number of workers’ compensation claims has decreased, but not fast enough to balance the increases in medical and lost wage costs.

Meagher states, “While we recognize that the current filing calls for a significant rate increase, it reflects the real costs of providing this kind of insurance. Without a rate increase, we will be unable to maintain a competitive market for workers’ compensation insurance in Massachusetts.”

Pulgini & Norton, LLP attorneys have handled workers’ compensation claims for over 25 years in and around Boston and its surrounding areas. If you or a family member has been injured at work and would like to seek legal assistance, please contact us at (781) 843-2200 or (888) 344-2046 or email us.

Cited Sources:

Workers’ comp rates could go up, boston.com, March 2, 2012

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