When the Workers’ Compensation Rating and Inspection Bureau (WCRIBMA) announced a workers’ compensation rate increase of 1.5%, you might have met the news with a big yawn: this miniscule rate hike seems as lackluster as the interest on a savings account at a bank. But this is actually big news, for it has been well over a decade since MA raised workers’ comp rates. It’s about time, as carriers are beginning to shy away from MA insureds, fearing that long-standing rate suppression makes a loss free insured with a credit mod a bad risk: there simply isn’t enough premium. The MA comp miracle – the state is ranked 48th for cost – is threatened by a growing assigned risk pool: at 18.9 percent, the pool is now the largest in the country. And unlike the pool at your health club, no one wants to be splashing about in this one.
Ups and Downs
It’s important to understand that the modest rate increase is not applied uniformly to all classes. Some rates are going way up on July 1 and others are dropping down. Here are a few examples of the largest shifts:
– Class 5403 Carpentry NOC is going up 11 percent to $11.00
– Class 5437 Carpentry, Cabinet is going up 13.5 percent to $5.52
– Class 9040 Hospital Professional is going up 13 percent to $3.04
– Class 09917 Domestic Service Contractor is going up 16 percent to $3.25
– Class 8017 Store, Retail NOC is going down 14 percent to $1.07
– Class 5057 Iron or Steel 2+ stories is going down 14 percent to $26.45
On average, across all classes, the change must average 1.5 percent. Agents should review the rate change impact on their insureds to anticipate swings in premium. Keep in mind that an increase in the class rate comes with a rise in expected losses – the mod might actually go down as the rate goes up. Conversely, a rate decrease lowers expected losses and often results in a higher mod for the insured.
If you want help in analyzing the impact of the new rates on your insureds, give me a call. I actually enjoy browsing through the rating tables and calculating experience mods. Just don’t ask me why.
Senior Workers Compensation Consultant