With the closing of the reopened case fund, the estimated cost for carriers is $1.6 billion in unfunded liability. Consequently, the New York's State Department of Financial Services approved a workers comp loss cost rate increase of 9.5% to become effective Oct. 1. 2013. Nearly 5% of the approved loss cost increase is due to the reopened case fund's closing.

After the implementation of the New York reforms to lower premiums, it is ironic that NYSIF (the state's workers comp carrier that has been known for cheaper rates and lower assessments of 9.2% as opposed to the private carriers 18.8%) no longer seems to be very competitive.

NYSIF's 2013 third quarter newsletter states that they will not raise their 9.2% assessment on current customers (at least not until 2016) despite the fact that NYSIF will now be subject to the same 13.8% assessment as private carriers as of January 1st. However, for new clients coming into NYSIF, they are going to be charging the new assessment rate of 13.8%.

In its fourth quarter newsletter, NYSIF announced that as of November 1st, their new loss cost multiplier is 1.53% which is a 53% increase on the published loss costs. In comparison, some other carriers are charging less than a 25% increase on the published loss costs.

To sum up NYSIF's troubles, all of NYSIF's new business will be getting the same assessment in 2014 as private carriers. In addition, NYSIF has raised their loss costs tremendously and thereby cutting the competitive advantage they had.

Of course this is great news for brokers because the State Insurance Fund is not paying commissions so they can increase revenue by placing more of their clients in the private market.

What it all comes down to is that someone has to pay to keep premiums profitable for carriers to want to continue doing business in New York. We'll have to watch how loss costs play a role with lower assessments.

Brokers should not become complacent thinking that lower assessments translate into lower premiums and higher client retention. The brokers that continue to offer their clients valuable tools to keep lowering their premiums are ultimately the brokers that will profit in this unpredictable market.

Workers Compensation Premium Recovery is the quickest and easiest way to help clients and prospects reduce their workers comp premiums. Also remember that the split point change has caused many employers with high premiums to have higher experience mods and thereby higher premiums, before even taking into account the higher loss cost rates.

Apex Services is a workers compensation premium recovery firm for brokers and employers. For more information about Apex, please visit: www.apexservices.com. Or, you can call Simon at (516) 791-3400.