N.Y. Insurance Dept. Approves 7.7% WC Loss Cost Hike
(July 16, 2010) — The New York Compensation Insurance Rating Board announced today that the New York Insurance Department has approved its filing for increased Workers' Compensation insurance loss costs. The board said that loss costs will rise by an average of 7.7 percent effective Oct. 1.
The impact on individual classifications is not yet available. The board said that it will publish them on its Web site by Aug. 1.
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Lawmakers Forestall NYCIRB Sunset; Loss Cost Rates Proceed
(Jan. 30, 2008) — As the Feb. 1 deadline loomed for a sunset provision that would have ended the ratemaking authority of the New York Compensation Insurance Rating Board and its ability to collect statistical data, both houses of the state legislature acted quickly to pass a second workers’ compensation reform bill that was delivered to Gov. Eliot Spitzer’s desk late yesterday. IIABNY has been working with NYCIRB, the Spitzer Administration and insurers to craft the legislation (A.9817/S.6798), which extends NYCIRB’s ability to collect and analyze statistical data used to develop loss cost base rates. Those base rates were called for in a special report to the Governor issued by the state Insurance Department in September 2007. The introduction of loss costs brings New York in line with the majority of other states and should foster greater competition to the benefit of employers. IIABNY’s leadership team met with NYCIRB officials last week to discuss its continued role and the transition to loss cost rating.
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IIABNY Weighs in on Out-of-State WC Rule (revised 10/23/07)
(Oct. 18, 2007) — IIABNY commented this week on a draft document intended to address the implications of the New York Workers' Compensation Board out-of-state employers’ rule that went into effect Sept. 9. (See Sept. 17, 2007 Situation Room posting.) IIABNY is urging a return to specific guidelines to determine when an out-of-state employer has “sufficient contact” with New York State to warrant state state workers’ compensation coverage.
Such guidelines were in place on the WCB’s Web site prior to the Sept. 9 effective date of the new interpretation. Commenting on the draft document IIABNY stressed the need for specific guidance for out-of-state employers to avoid unintentional compliance. Among the criteria IIABNY supports is a physical location in New York, a minimum payroll for New York operations or minimum number of hours worked in New York.
In September, IIABNY representatives met with the board to express concern over the new rule resulting from the board’s interpretation of a provision in the reform legislation signed in March by Gov. Eliot Spitzer.
The draft document establishes “guiding principles” for enforcement actions against out-of-state employers who lack a New York State policy and whose employees have minimal contact in the state.
IIABNY will continue to work with the Spitzer administration and insurance industry in seeking an appropriate solution. Watch for further updates.
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Comp Board is 'Re-evaluating' Out-of-State Employers Rules
(Sept. 17, 2007) — IIABNY representatives met this morning with officials of the New York Workers’ Compensation Board, and the board has announced that it is “reviewing” the effect of this year’s reform law on coverage requirements for out-of-state employers. The meeting came in response to concerns about potential adverse effects from the board’s previous interpretation of one provision in the law.
IIABNY Chair of the Board Stephen R. Zogby of Scalzo, Zogby & Wittig, Inc., New Hartford; President and CEO Dick Poppa; Senior Vice-President for Industry Relations and Education Kathy Weinheimer; and legislative representative Michael Barrett met with board officials at the agency’s offices in Albany. The IIABNY group conveyed the concerns of insurance agents and brokers from New York and other parts of the country about the board’s new requirement that all out-of-state employers with employees working in New York must list New York under Item 3.A. of the declarations in their Workers’ Compensation insurance policies. IIABNY has heard from many producers and producer groups from around the country on this issue.
The officials reported that the new requirement is “on hold” at this time. To that effect, the board has posted an announcement on its Web site that it is “currently reviewing (the) provision, along with the comments and concerns of its stakeholders, and seeking appropriate assistance to develop the rules implementing the section of the new law.”
Of special concern to producers, the officials confirmed that out-of-state employers will not be subject to the New York law requiring employers to provide disability coverage for their workers.
The officials gave no indication as to how long the review would take, but pledged to work with IIABNY on any regulatory or legislative solutions that this problem may require. IIABNY offered to share its legal research with the board and promised its help in resolving this issue in a fair and reasonable manner.
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Spitzer Announces Task Force to Catch Misclassified ‘Independent Contractors’
(Sept. 11, 2007) — Gov. Eliot Spitzer announced last week a new Joint Enforcement Task Force to address employee misclassification, a situation where an employer improperly labels an employee as an independent contractor or pays workers off the books. Misclassification, the governor said, deprives employees of numerous legal protections to which they are entitled, such as unemployment insurance, workers’ compensation, social security, tax withholding, minimum wage, and others. He also pointed out that it puts law-abiding businesses at a competitive disadvantage.
The Task Force, led by the Labor Department, will “work to strengthen enforcement and avoid duplication of efforts by sharing relevant information, coordinating investigations and enforcement actions, and educating the business community and the public at large.” The governor will require the Task Force to report to him on Feb. 1 each year on its actions and suggested legislative or regulatory changes.
This issue has received increasing attention recently. A January 2007 report by the Fiscal Policy Institute said that between 500,000 and one million New Yorker workers who should be covered by workers’ compensation insurance are not. The workers’ compensation reform act enacted last month contained increased penalties for employers who cheat the system.
While insurance agents and brokers are not responsible for how an insured classifies employees, they need to be aware of the rules to properly advise their customers and as they apply to their own businesses. IIABNY was instrumental in getting the Workers’ Compensation Law amended several years ago to clarify when an agent or broker is an independent contractor and not an employee. Under the law, the agent or broker is an independent contractor if he or she meets all of the following conditions:
- His income is based on sales and not on the number of hours worked.
- He is not a life insurance agent receiving a training allowance subsidy.
- He has entered into a written contract that outlines the services he is to perform. Either party has the ability to cancel the contract at any time by notifying the other party.
- He can work any hours he chooses.
- He incurs his own expenses, including automobile, travel and entertainment.
- He is not treated as an employee for State and Federal tax purposes, other than FICA as it applies to full-time life insurance agents.
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Dinallo Requests CIRB Curb and "Open Competition" in WC Rating Process
(Sept. 5, 2007) — Superintendent Dinallo’s recent announcement encouraging “open competition among insurance carriers” in developing Workers’ Compensation rates is welcome news to IIABNY and its members. In his 54 page report to Gov. Eliot Spitzer and Legislative leaders, Dinallo recommends that the current rate-making body – the Compensation Insurance Rating Board – no longer file rates. According to Dinallo, the CIRB should “continue to collect and analyze” the data necessary to determine rates – at least for now. The CIRB would still develop loss cost based on historical and projected loss experience and carriers would use them as the basis for developing their specific rates.
Dinallo has asked for the opportunity to evaluate the CIRB’s data- gathering ability and to recommend its replacement with “another entity” if necessary. IIABNY strongly believes that the National Council of Compensation Insurance would be the best long term option. As the oldest and largest statistical source of workers’ compensation and employee injury-related information in the United States, the NCCI has broad experience. According to its Website, the NCCI is the “licensed rating and statistical organization” for more than 30 states.
IIABNY will continue to monitor progress of the recommendations as they work their way through the Legislature and update its members.
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New Out-of-State Employer Requirement Raises Questions
(Aug. 28, 2007) — The New York Workers' Compensation Board has announced that, effective Sept. 9, 2007, it will require all out-of-state employers with employees working in New York to carry a “full, statutory New York State workers’ compensation insurance policy.” The board said it took the action as a result of the workers’ compensation reform legislation signed into law on March 13, 2007. An employer has full, statutory NYS workers’ compensation coverage when the information page lists New York under item 3.A.
Prior to Sept. 9, the board required an out-of-state employer to carry NYS compensation insurance if there were “sufficient contacts,” such as a physical location within New York State, $50,000 in payroll during a calendar year in New York State, one or more employees with a primary work location or hired within New York State, or employees working in New York State for more than 90 days during a calendar year. An out-of-state employer that did not meet any of these requirements could file a WC/DB-101 form, “Affidavit that an Out-of-State or Foreign Employer Working in NY Does Not Require Specific NY Workers’ Compensation or Disability Benefits Insurance Coverage.”
Effective Sept. 9, the WC/DB-101 form will be obsolete and the criteria for “sufficient contacts” will no longer apply. The board has interpreted new language in the reform legislation to mean that all employee contacts in New York, whether casual or not, require full statutory workers compensation and disability coverage. Taken to the extreme, this would mean that the board would require coverage for an employee who might attend a conference in New York or even just drive through the state while on business. There is also a concern that the new requirements could trigger retaliatory action from other states against New York employers.
As a practical matter, enforcement will be extremely difficult and will likely occur when there is a compensable injury for an out-of-state employee in New York State.
IIABNY is working with regulators to address this very serious issue and interpretation of the reform legislation. We will meet soon with the Workers' Compensation Board to try and work out a solution that will serve the best interests of New York employers and those who visit our state.
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(March 13, 2007) — Prospects for greatly improving the New York workers’ compensation insurance system are finally within reach. Today, Gov. Eliot Spitzer signed into law legislation that includes cost-savings reforms IIABNY and NY First – New York Compensation Action Network have aggressively pursued over the past three years after passage, albeit belatedly, by the state Senate and Assembly.
As IIABNY has often stated, New York’s economy has been saddled with one of the nation’s most expensive workers’ compensation systems, which at the time paid some of the lowest benefits to injured workers. That should change thanks to the association’s efforts, NYCAN (the coalition we started in the ‘90s and reconvened in recent years), other industry and business interests, as well as Gov. Spitzer and legislative leaders.
IIABNY is looking forward to fulfilling the legislation’s promise of lessening the burden on employers by cutting premium costs from 10 to 15 percent. Of course, how the law will be implemented will determine how soon those savings are achieved. Much of the cost savings is expected to come from anti-fraud measures and limits to permanent partial disability benefits that go immediately into effect.
Meanwhile, IIABNY will work with the Spitzer Administration and the state Insurance Department to ensure New York has the workers’ compensation system that benefits New York’s business community and its employees.
The association will also provide members a detailed analysis of the new law’s provisions in a future issue of IIABNY Insider.
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Landmark Legislation Passes Legislature; Increased Benefits for Injured Workers, Savings for Employers Due
(March 7, 2007) — The New York State Legislature acted swiftly yesterday in passing workers’ compensation reform legislation, which was announced just last week in an agreement reached between Gov. Eliot Spitzer and leaders of the Senate and Assembly. Gov. Spitzer is expected to quickly sign the legislation into law.
IIABNY played a major role by organizing the insurance industry and New York State employers to push for reform through its leadership in the NY First New York Compensation Action Network. Reducing employers’ premium costs for workers’ compensation insurance has been a top legislative priority of the association during the past three years. IIABNY supports the reform legislation because it includes all of the key elements in NYCAN’s reform agenda.
Highlights of the new legislation that will directly impact employers and their employees include:
weekly benefits increase for permanent or temporary partial disability and permanent or temporary total disability from $400 to $500 for injuries occurring after July 1, with annual increases through 2010 when it will be indexed at two-thirds of the average weekly wage in New York;
establishment of a cap on the maximum number of weeks that a permanent partial disability recipient may receive indemnity payments. The maximum number of benefit weeks will range from 225 weeks to 525 weeks, depending on the injured worker’s wage-earning capacity. The legislation also addresses situations of extreme hardship and return-to-work programs. This section alone is expected to result in substantial cost savings for employers since PPD claims currently comprise 81 percent of the aggregate cost of workers’ compensation claims;
elimination of the “Second Injury Fund,” which currently accounts for an 11 percent-assessment on workers’ compensation policies; and
increase of allowable expenses for a variety of medical procedures and treatments.
The reform legislation is a major step toward reducing the high costs of workers’ compensation insurance in New York and its devastating effect on the New York economy. IIABNY's Legislative Officewill be working with the Spitzer administration and the Insurance Department on implementation to assure that the projected savings are achieved . Watch for a detailed analysis of the provisions of the legislation currently being prepared by IIABNY staff.
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WC Reform in NY Makes Major Leap Forward with Agreement
(Feb. 27, 2007) — Although the proverbial "devil is in the details" remains, IIABNY is hopeful the agreement announced today between Gov. Eliot Spitzer and leaders of the state Senate and Assembly will soon result in meaningful reform of the workers' compensation insurance system. Reducing employers' premium costs has been a top legislative priority of the association for the past three years, and the reform measures outlined in the agreement appear to address the issue with a promise to reduce such costs by 10 to 15 percent.
Gov. Spitzer, Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver say they expect to achieve cost savings of hundreds of millions of dollar by limiting the number of years "a small population of claimants," presumably those classified with permanent partial disabilities, can receive benefits. Weekly benefits for injured workers would also be increased under the terms of the agreement.
IIABNY expects to support the legislation to be introduced in the legislature this week if it reflects the proposed reforms announced today. However, the association will call upon its members to contact their legislators if it appears the bill before lawmakers compromises the long overdue reforms promised.
Gov. Spitzer News Release, Feb. 27, 2007
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