Workers’ Compensation Premium Increase: The Annual Rite of Summer but Where was the Business Community?
by Denis Hughes, President, New York State AFL-CIO

Across the country, this is the time of year for celebrations: fireworks, beach parties, and picnics. In New York State, the end of June also signals the annual hearing of the New York State Insurance Department.

Each year, the Department considers the request of the Workers’ Compensation Insurance Industry to increase the premium employers must pay for coverage. As we all know, Workers’ Compensation insurance is a mandatory coverage for employers in New York State, and as certain as fireworks on the fourth of July, an insurance industry with an insatiable appetite for greater profit will ask for an unwarranted increase in premium.

This year’s hearing was held on June 28 in Manhattan. Attending the meeting were employees of the insurance department, employees and officers of the Workers’ Compensation Rating Board, which is totally financed by the insurance industry, and employees of various insurance companies. I am proud to say that the New York State AFL-CIO was also there in an effort to challenge the demands of the insurance industry to increase the fees that employers in the state must pay.

Considering that benefits for injured workers have not increased in fourteen years, and that the fee schedule for medical providers serving the injured has stayed the same for over ten years we can not understand the need for any additional money for the insurance companies. In addition, state leaders continue to crow about the increased efficiency of the system. Which makes the request for a premium increase even more bewildering. But, this alone is not the sole source of my frustration.

What really concerns me is where the employers were. Or more precisely, weren’t. I can tell you where they weren’t. They weren’t at this very important hearing. Albany certainly has no shortage of employer organizations: The Business Council; Small Business Association; groups representing retail employers, convenience store owners, manufacturers, the health care industry and construction contractors just to mention a few. But not one employer association or chamber of commerce showed to question the demand by the insurance industry for more bucks. I cannot understand the absence of any and all employers from this process.

Let me say this again. Not one employer or business community representative attended a hearing to publicly oppose a rise in their own premium costs. How is that possible?

By not appearing, they missed hearing numerous insurance company representatives testify that worker compensation insurance in New York State was a profitable venture. Nor were they able to hear when questioned by the employees of the insurance department, that the profit for the workers’ compensation insurance industry in New York State far exceeds the national average. Sadly enough by not being present, they missed sworn statements by insurance industry representatives that the severity of injuries in the workplace of New York State which cause serious permanent disabilities are increasing while minor injuries are declining.

Their nonattendance is inexcusable, but what is worse is that instead of confronting the insurance industry, many employer groups such as the Rochester Business Alliance want to blame permanently disabled workers and retirees for the problem. It’s sad that they lack the courage to take on the insurance industry but instead attack those least able to defend themselves.

Fortunately, on July 17th the State Insurance Department officially denied the rate increase. But this in no way excuses the business community for not attending this important hearing.

The time has come for business organizations to bounce insurance vendors and peddlers from their leadership on workers’ compensation reform efforts. The time has come to have serious discussions with organized labor to fix this broken system.

Certainly if those organizations supporting an unshackled upstate economy had appeared at the hearing with evidence of a disparity in loss ratio for workers’ compensation insurance in their area versus the New York Metro-area, the meeting would have been the proper setting to discuss regional rating. Unfortunately the alliance decided not to attend, while continuing to spend their time picking on the weak and powerless: injured workers.

by Denis Hughes, President, New York State AFL-CIO

50 Broadway, 35th Floor, New York, New York 10004

July 20, 2006