Straight Talk About WC Insurance Rates

                               New York, NY - There is always a lot of talk about what causes workers' comp. insurance costs to increase or decrease. With all the talk lately about cost increases, it seems a good time for some straight talk about the price you pay for workers' comp. insurance.

A simple explanation is that the amount charged for your type of business is derived from the most recent total amount paid on claims for similar types of businesses statewide. This determines the loss cost for your class of business. The New York Compensation Insurance Rating Board (NYCIRB) promulgates these loss costs, reflecting data from all insurance companies, which become official upon approval by the New York State Insurance Department.

As part of workers' comp. reform, all insurance companies, including NYSIF, apply their own Loss Cost Multiplier (LCM) to the official loss costs in arriving at a manual rate for any given classification.

NYCIRB also promulgates your Experience Modification based on your own loss experience, which modifies your manual rate. All insurance companies must apply this “experience mod,” even if you change insurers. The resultant rate is your standard rate. Your standard rate multiplied by your payroll size determines your standard premium with your particular insurance company.

NYSIF applies its prevailing LCM to calculate manual rate and, depending upon your prior loss experience, payment history, adherence to safe workplace practices and compliance with all of your obligations under the Workers' Compensation Law, applies discounts, dividends or other premium credits to your policy.

This is where NYSIF's LCM differs from the advertised LCM of other insurance companies. As of April 1, 2010, NYSIF's published LCM is 1.43, but this is a pre-discount, pre-dividend calculation. In fact, NYSIF maintains a very competitive LCM. Based on your loss experience, NYSIF offers a variable up-front discount that yields an effective LCM as low as .93, which, for customers with a favorable experience mod, is among the lowest in the marketplace.

That includes one of the highest advance discounts offered anywhere – up to 35% for those who meet specific criteria – and the opportunity to spread your payments over 12 equal monthly installments. For eligible safety group members NYSIF offers extremely attractive dividends based on group performance. Finally, NYSIF eliminates the charge applied to Section 15-8 of the New York State Assessment that all insurance companies must pay, reducing by 7.9% the bottom line for all our policyholders.

For 95 years as a not-for-profit insurance carrier, NYSIF has always provided policyholders the lowest cost for workers' comp. insurance consistent with maintaining solvency – with documented up-front discounts and uninterrupted dividends that span our history.

Source: New York State Insurance Fund 

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