May 17, 2005

New York Rates: Follow the Bouncing Ball

New York is famous for being a high cost state for workers compensation. By any reasonable measure, New York falls within the top four states for high comp cost, sharing the dubious spotlight with California, Texas and Florida. With its unique paternalistic approach, the state requires multiple hearings during the course of a routine claim. While attorneys in most states earn their fees by negotiating lump sum settlements, in New York they just have to show up. And show up. And show up.

Trending Up
New York is a tough state for writing workers comp. They are in the midst of a struggle to establish new rates -- and unlike many states, this is not a question of how deep to cut current rates, but rather how steeply to raise them. The initial request from the New York Compensation Insurance Rating Board was designed to get everyone's attention: a whopping 29%. As that most quotable of New Yorkers, Yogi Berra, might say, "It's deja vue all over again." It's been over a decade since most states have seen a rate increase request of that magnitude. But that extravagent request was subsequently withdrawn by the board and replaced by a more modest -- but hardly less aggravating -- 9%. Wait a few days and it changes again. The most recent request on the table is for 16.1%.

Bouncing Ball
It's hard to follow the bouncing ball, but one thing is clear. Rates are likely to go up, because costs are out of control. New York's system, one of the first in the nation, still embodies the deeply adversarial divides of labor and management. It's a system full of friction and conflict. When the ball bounces in New York, it lands squarely on the heads of New York's employers, who pay the price for a dysfunctional system. Overall, New York ranks pretty low (45th) in general friendliness to small business. It will take political will and courage to turn this situation around. That's not exactly what we see on the immediate horizon. So for the time being, when it comes to rates for comp in New York, it's like the architecture in Manhattan: how high will they go and how fast?



Perhaps if NY Insurers would actually pay claims in good faith instead of delaying the inevitable until the claimant is starved out or dies, the rates would go down. However, workers' compensation insurers do everything including producing fake medical reports to get out of paying a claim. The money trail leads to the insurers not claimants. Claimant fraud is less than 3% (found by independent studies). Insurers are where the fraud is. Too bad no one investigates them!

Agree with Mr Jeffords.
I am trying to open a small business as a wholesaler. Will just have one employee ansewering the phone. But the NYSate Fund don't want to classify this employee as administrative.
They said, "we quote your type of business".Since when workers comp. cost is not related to ocupational hazard ? (besides bussiness type).
The other excuse was that I told them I will hire trucking companies to deliver my product. My understanding was that they are liable for their workers comp. But they told me, that if such trucking co. fails to carry WK.Comp, and there is a claim, I am liable.
So they clasiffy me and quote me a high policy.
I think it does not make sense. If such co. did not comply with the law (by not having WC), they should be liable with all their assets.
Since when the State tranfer the responsability of checking if companies (we do business with) comply with regulations ? That's the State job;
I am a small business, and don't have time/resources to police companies that supply me with services.
Is NY State creating a good enviorement for small business creation and growth?
I belive regulators should take a close picture to how many busineses California lost to Nevada for similar practices.
I would be the first to leave, if I could (too much invested).But as I feel now, I think I will sitll consider it, as soon as I "just" get to brake-even point. Will not be easy, due to sentimental ties.
But cannot keep seeing all profits being taken to fund this conflicted system.


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This page contains a single entry by Jon Coppelman published on May 17, 2005 4:42 PM.

Drug Prescription Hit Parade: Ka-Ching go the Strings... was the previous entry in this blog.

Negligent hiring: Any limits to employer liability? is the next entry in this blog.

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