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MA Work Comp Rates: "Toto, we’re not in Taxachusetts anymore!"
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MA Work Comp Rates: "Toto, we’re not in Taxachusetts anymore!"

With the approval of an astonishing overall average rate decrease of 12.9 percent, effective July 1, 2018 (PDF) Massachusetts will retain its crown as one of the least expensive states in the country for workers compensation. This unlikely story has its origins in the state's 1991 reforms, which over time propelled the state from the third highest cost to among the very lowest.

Let's look at a few typical class rates and compare them to the rates in 1995, as well as with current rates in the neighboring states of Connecticut (PDF) and New Hampshire (PDF).

Carpentry, framing (class code 5645): Back in 1995 the rate was $15.46 per $100 of payroll; on July 1 the rate will be $7.10. By comparison, the advisory loss cost (base) rates are $10.13 in CT and $10.59 in NH. NOTE: Advisory loss cost rates are usually much lower than the final rate charged.

Carpentry, finish (class code 5437): The 1995 rate was $11.83. It drops to $4.49 on July 1. The advisory loss cost in CT is $10.13 and $7.62 in NH.

While we're looking at construction rates, perhaps the most dramatic change is in steel erection above two stories (class 5040). These are historically the most expensive class rates: when a steel worker trips and falls, it's often fatal. Back in 1995 the MA rate was a whopping $87.09 per $100 of payroll. The current rate of $59.67 is still way up there. Under the new plan, the rate drops to $24.00! Equally astonishing, the advisory rates in CT and NH have also dropped substantially: to $25.42 and 16.64 respectively. This is a clear indication that new technology in high rise construction has dramatically reduced the number of serious accidents.

Let's also take a look at the class rate for distributing explosives (class 4777), a sure-fire high-risk joke class among underwriters. The rate remains high in CT at $25.39. But look what happens the neighboring states: in New Hampshire it's only $5.50. As for MA, it's a paltry $2.95. Go figure.

Finally, it's worth noting that not all MA rates went down: while the overall rate reduction is 12.9 Percent, in a few classes, the rates actually went up. Which brings us to a class code where employment is way up and the stress of work is substantial: parcel ("make that next day") delivery (class 7230). The current rate in MA is $7.96. On July 1 it goes up a bit to $8.37.

Here's an important ALERT to agents writing business in MA: when rates drop, the expected loss rates drop with them. Your accounts with high losses will see their mods go up as the rates go down. Be prepared: send me the most current experience mod rating sheets and loss runs and I'll run the numbers to determine just where the mod is going. In the volatile world of workers comp, our motto should always be "no surprises!"

Jon Coppelman
Senior Workers Compensation Consultant

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