DeWITT — The New York State Department of Financial Services has approved an average 5.9 percent increase in the workers’ compensation loss-cost rate for new and renewal business at fully-insured companies, which will take effect on Oct.1. That’s according to a July 17 bulletin posted at the website of the New York Compensation Insurance […]
DeWITT — The New York State Department of Financial Services has approved an average 5.9 percent increase in the workers’ compensation loss-cost rate for new and renewal business at fully-insured companies, which will take effect on Oct.1.
That’s according to a July 17 bulletin posted at the website of the New York Compensation Insurance Rating Board (NYCIRB).
KBM Management, Inc., a DeWitt–based employee benefit and risk-management company for self-insured companies, posted a portion of the Insurance Journal’sreport on the increase to a blog on its website.
Ziv Kimmel, vice president and chief actuary at the NYCIRB, had told the Insurance Journal that the loss-cost increase is necessary to “keep pace with increasing indemnity and medical costs” in the state, according to the KBM Management blog.
“All employers … that [are] required to carry workers’-compensation insurance will be affected by this rate, if they are fully insured,” says AnneMarie Latocha, senior consultant on self-insured workers’ compensation at KBM Management.
Latocha spoke with CNYBJ on July 31.
Even though Latocha works on self-insured workers’ compensation, she provided CNYBJ an explanation of how the loss-cost rate affects fully insured firms.
The state Department of Financial Services establishes the loss-cost rate, says Latocha.
The rate represents part of the equation that insurance companies use to calculate the workers’-compensation insurance premium, she adds.
Besides the loss-cost rate, individual insurance companies apply for a loss-cost multiplier, which is determined based on their internal expenses for handling the workers’-compensation insurance.
“The [state] Department of Financial Services would [then] approve the loss-cost multiplier, so then you take the loss-cost rate times the multiplier to come up with a final rate,” says Latocha.
The rate applies to different classification codes and is used to determine the overall premium for the employer, she adds.
Workers’-compensation coverage is a requirement for New York employers, says Mary Lou Karins, account manager in KBM’s quality assurance audit department. Karins also spoke with CNYBJ in the same interview on July 31.
CNYBJ also asked about the increasing indemnity and medical costs that Kimmel had cited as the reasons for the increase in the loss-cost rate.
Indemnity refers to the lost wages that an insurance carrier or third-party administrator pays to an injured worker, says Karins.
“So when you are injured at work and you lose time from work and you’re not being reimbursed by your employer, the insurance carrier of the third-party administrator … will pay lost wages or indemnity benefits to the injured worker, typically every two weeks,” she adds.
All of the expenses associated with the benefit have increased, says Latocha, noting that the insurance companies need to increase premiums “to catch up.”
KBM Management works with employers to help control costs associated with their employee benefits, including health and workers’-compensation plans, according to Karins.
Its clients include school districts, private employers, municipalities, and national associations, she said.
Andrew Miller is the firm’s president, and Patrick Cowburn is the company’s vice president, according to its website.