Check out this article by the Workers’ Compensation Policy Institute. 

According to a study by The Workers’ Compensation Policy Institute, New York employers pay an added workers’ compensation surcharge nearly five times the average of that in other states.

• New York’s workers’ compensation surcharge is currently 20.2%, more than double of its nearest competitor Minnesota (8.9%).
• The average assessment is 4.2% for the 32 other states that impose this premium tax.
• The assessment has been steadily on the incline in New York, with increases of 10.4% in 2010 and 27% in 2011.
• Half of New York premium tax goes to support the state Special Disability Fund, the state's second injury fund.
• It is also used to fund the Reopened Claims Fund (a 5.7% assessment) and to run the State Workers’ Compensation Board (a 3.2% assessment).

Bad news for employers and bad news for brokers because brokers are making commissisons based on pure premium, not on assessments.  High assessments can only lead a broker to have to reduce premiums to stay competitive.   Thankfully a sophisticated broker in today’s market has the opportunity to offer his/her clients many value-added services, which makes the argument to not just look at upfront price, but rather the agency’s long-term value with long-term savings.  Agencies that can actually show their clients real savings for work that they’ve done for them will certainly maintain their clients.  If an employer only cares about price from a broker, I believe there will not be a long-term relationship because every year becomes an open season price-shopping bidding war.  It’s the extra programs that a broker offers their accounts that offer long-term loyalty to your brokerage.  Now just think when your clients think of you, do they think price or service?

You can read the full article here.

Robert Hartwig, President of the Insurance Industry Institute (I.I.I.) weighs in with great news for workers' compensation brokers.

Energy, natural resources, agriculture, health care, and transportation and infrastructure are at the beginning stages as the country’s newest growth engines, Hartwig says.

“And many insurers would find that they are underexposed to these sectors,” Hartwig says.

The largest growth area may be due to the age demographics of the country. Due to insufficient returns, insurers may have shunned from writing workers’ compensation in the health care industry, for example, but continuing to do so is “removing yourself from the largest growth area in the next 10-20 years,” Hartwig predicts.  See article by PropertyCasualty360.com here.

Reduce your clients/prospects experience mods and enter all markets with the upper hand…

BROKER OPPORTUNITY!!  Are you a broker that has placed business with The Hartford and seen clients' losses go up?  Are you prospecting an account that has contributed to The Hartford's bad loss ratio? If you answered yes, then I see a big Broker opportunity  here called Workers' Compensation Premium Recovery Service for Brokers. Knock down clients/prospects experience mods up to 6 years back and get them back new money from old premiums, while you, the broker, earn first year and renewal commissions. A win-win for everyone… And the client will have a better underwriting profile to enter the renewal market place with. See Business Insurance article here.

The New York Rating Board approved an increase in the split point from the current $5,000 to at least $15,000 in several steps, with the first step to be set at $10,000 effective October 1, 2013. Further research was recommended to determine appropriate split points subsequent to that date.

New York  is making these changes following NCCI’s announcement in August 2011 to  Increase the Split Point in the mod, changing over a three-year transition period from its current value of $5,000 to 10,000 for the first year starting in 2013 then 13,500 for the second year and 15,000 for the third year.

This is not surprising since New York has been on the same page as NCCI in many areas over the years.

The bottom line is that good mods will get better and bad mods will get worse. Start finding ways to knock down the mods now for your clients because if they're hit hard, they start shopping for better prices.

Reduce their mods, keep them happy, and everybody wins!

YES!! Workers' Comp RATES are UP in 2012.  See attached article from Business Insurance here.

 BROKERS that focus on providing  value-added services to medium & large Workers’ Comp accounts will see fatter commissions in 2012!!  Rates are going up, Premiums are going up, value is counting way more and is paying off 7.5% more per the attached article from Business Insurance here .

 Good news for brokers!  We are heading toward a HARD MARKET in 2012

 The workers’ compensation soft market that has kept premium rates low is “firming” in the new year, according to field experts.  According to Robert Hartwig of the Insurance Information Institute, the national average combined ratio in 2009 was about 118%, meaning carriers were paying out $1.18 for every dollar received in terms of premium, an ongoing trend since 2005. Although we are yet to see premium increases around the 10% mark to indicate a hardening market, insurance carriers are raising rates and being more selective about their exposure. Renewing premiums increased about 5% towards the end of 2011, suggesting that the insurers are working back towards the road to profitability. Workers’ compensation rates are inevitably on the incline and reducing costs for employers will be difficult in the turning market trend; state funds are likely to increase their rates as well and many employers do not possess the necessary deposits to self-insure.  

Here is a piece from the attached article:

“However, while rates are hardening, loss costs also continue to rise. Our view is that until rate increases exceed loss cost inflation, we will not be in a market where insurance company results can improve and we start to enter a real hard market.”

In other words,  Loss Costs may continue to rise, but, some carriers may use lower Loss Cost Multipliers in order to keep rate increases to a minimum. In doing that, their rates may still wind up being inadequate where it does not help to decrease their loss ratios…

Let’s hope rates increase to where they should be so brokers can operate in their ideal market!

See article here.