Massachusetts Governor Announces $170 Million Workers' Compensation Rate Cut

May 15, 2007 -- BOSTON – Today, Massachusetts Attorney General Martha Coakley and Governor Deval Patrick announced a settlement in this year's workers’ compensation rate setting proceeding, which will result in approximately $170 million in savings for businesses in Massachusetts. The new reduction averages a 16.9 percent savings per business; a significant increase from the last rate reduction in 2005 which averaged only a 3 percent savings. The Commissioner of Insurance has approved the settlement.

"In order for Massachusetts' economy to thrive, it is crucial that we bring down the costs of doing business in the Commonwealth. By lowering the cost of workers' compensation insurance, we can continue to promote job growth in Massachusetts by not only attracting new businesses, but also allowing established businesses to cut their costs while still providing their employees with the appropriate coverage," said Attorney General Coakley.

"The remarkable turnaround that Massachusetts has experienced in workers' compensation costs is a direct result of employers, employees, insurers and state government all uniting around a common goal," said Governor Patrick. "Where rates were once spiraling out of control, they’re now being contained. This most recent reduction means employers will continue to see their business costs go down and workers will continue to receive the support and protection they deserve."

The Workers' Compensation Rating Inspection Bureau (WCRIB) is the private, non-profit association of insurers, which files workers' compensation rates on behalf of member insurers with the Division of Insurance. Earlier this year, WCRIB proposed a 13.4 percent average decrease in current rates. The Attorney General pressed for a larger average rate decrease, resulting in the final 16.9 percent settlement. As a result of the Attorney General’s advocacy, Massachusetts businesses will save approximately $35 million extra when the new rates take effect on September 1, 2007.

Businesses may also receive additional savings next year in their workers' compensation bills. Under the terms of the settlement, insurance companies must have their rates reviewed by the Division of Insurance next year. Under current law, insurers have the right to seek rate increases annually, but only have to undergo review every two years if rates are decreasing.

Workers compensation insurance provides coverage for lost wages, permanent injuries, and medical care for workers injured on the job. Massachusetts businesses are required to carry workers compensation insurance, and the rates are set by the Division of Insurance after a rate setting proceeding.

The Attorney General's Insurance and Financial Services Division represents the public interest in these rate trials, and advocates for fair rates for insurance customers.

Source: Massachusetts Governor

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