The Commissioner of Insurance disapproved the Massachusetts Workers Compensation Rating and Inspection Bureau rate increase filing scheduled for September 1st. The obvious good news is that rates are not going up on September 1st. Conversely, the bad news is that this is not necessarily a good thing for everyone!

Workers Compensation rates over the past decade have dropped significantly as various reforms were implemented. However, rates have not kept pace with the increases in medical costs. Insurance carriers have watched margins drastically decline on this line of business and have been closely monitoring what Insurance Commissioner Joseph Murphy was going to do. Now they know.

Why is this potentially a bad thing for employers?

Insurance carriers are going to be conservative when underwriting new business and re-underwriting existing business. They will be looking for the best possible risks. If you are in a less than desirable class of business, have questionable loss experience, marginal safety and return to work programs you will, if offered terms, find them much different (i.e., not in your favor) than your prior plan year policy. If not offered terms, guess what? You will go into the Workers Compensation Assigned Risk Pool. Not a great alternative. (I predict a doubling of the pool population in 2013!)

What to do?

Be proactive. Find out how this is going to affect your next renewal. What is the stance of your existing carrier? Be prepared to tune up your current safety and return to work programs. Aggressively work to reduce reserves and close claims before marketing your program. This is especially critical if you are on a loss sensitive plan.