Massachusetts has long been known as one of the lowest cost states for workers comp, so it came as a surprise a few years ago when the state lowered workers comp rates by an average of 12.9%. Well, here comes another surprise: The Workers Compensation Rating & Inspection Bureau of Massachusetts (WCRIBMA) has recommended yet another rate cut, this time averaging 3.9%. (NOTE: some rates will go down and some will go up, with the average change at 3.9%) When the new rates are implemented in July of this year, the rates will be about 70% lower than they were in 1990, when the state was the third most expensive in the country; MA workers comp rates will soon rank in the high 40s.
I was among the many who thought the rates were too low even before the 12.9% drop. Well, we were wrong: the rates came down and insurers were still making money – and still offering premium discounts. The “MA Miracle” continues.
Lower Rates and Higher Mods
Lower rates are not good news for everyone. For insureds with higher-than-expected losses, lower rates translate into higher experience mods. For those in construction, mods drifting above 1.0 can exclude them from bidding on many projects. With rates as low as they are, a loss or two of modest magnitude can drive the mod to 1.25 and higher.
Every mod calculation sheet issued by the MA Bureau contains a disclaimer that begins: “Experience modifications should not be used alone as a test for workplace safety.” Unfortunately, few people bother to read the disclaimer, which, needless to add, is not routinely included in a subcontractor’s bid for work.
This is a good time for agents with MA workers comp accounts to review current mods and up-to-date loss runs for MA insureds with policies beginning after June 30. For those with current mods above 1.0 or losses in PY 18, a mod projection is in order, using the soon-to-be-finalized rates. Just send me the documents and I’ll do the calculations. Together we can develop a strategy for informing insureds of the news , whether good or bad.
Senior Workers Compensation Consultant
Related prior posts
- MA Work Comp Rates: “Toto, we’re not in Taxachusetts anymore!”
- Annals of Workers Comp: The Bay State’s Not-So-Secret Sauce