N.Y. Gov. Spitzer, labor, business reach workers’ comp reform accord

But workers’ comp insurers are nervous that cost savings promised by the reforms’ supporters may not materialize

New York Governor Eliot Spitzer and legislative leaders have reached an agreement to reform the state’s workers’ compensation system that has the backing of business and labor.

Under the agreement, benefits for injured workers will be increased for the first time in more than a decade, and employer costs, which are among the highest in the nation, will be reduced by 10 to 15 percent with savings to grow over time, according to the plan’s authors.

The plan calls for the possible scrapping of the current Compensation Insurance Rating Board, which helps decide what employers pay for coverage, and directs the state insurance superintendent to ensure that any system savings “are captured in premium rate reductions, beginning in the next rate setting cycle that concludes this July.”

The plan also includes new anti-fraud measures and the closing of the state’s Second Injury Fund, which the backers predict should lead to double digit savings.

While politicians, employers and labor praised the plan, insurers appeared concerned whether the savings promised could be realized.

“This is a remarkable win-win situation for both workers and employers,” said Spitzer. “Thanks to the cooperation of legislative leaders and staff, and with constructive input from business and labor, we’ve developed an approach that will achieve the twin goals of helping injured workers and improving the state’s competitiveness.”

The accord was hailed by House and Senate leaders, both Republicans and Democrats.

“Under this agreement, the weekly benefit for injured workers would be raised significantly and, for the first time in the state’s history, an ongoing maximum benefit rate increase would be indexed and not ever require further action by the Legislature or Governor, a provision the Assembly has long fought for,” said Speaker Sheldon Silver.

“The agreement on workers compensation reform is a tremendous victory for workers, who will receive increased benefits, and for businesses that will see a significant reduction in premiums,” said Senate Majority Leader Joe Bruno.

Employers predicted the plan would prove to be an economic boost for the state.

” It is a big win for improving our economic climate, especially Upstate,” said Kenneth Adams, president of the Business Council of New York.

Dennis Hughes, president of the AFL-CIO, said labor is “immensely pleased” with the pact.

But insurers, the ones likely to be caught in the middle between benefit increases and promised rate cuts, were waiting for the details before celebrating.

Speaking for the American Insurance Association, Gary Henning, assistant vice president, indicated that carriers are being cautious until they see details.

“We need to carefully review this measure so we know exactly how the cost savings will be generated,” Henning said in a statement.

Frank O’Brien, regional manager for the Property Casualty Insurers of America, said his group is “pleased to see Gov. Spitzer make this issue a top priority of his administration.”

As for the specific reforms, PCI said it would comment after it analyzed them.

Insurance agents reacted positively.

The Independent Insurance Agents & Brokers of New York, Inc. said the accord is a “step in the right direction” but also stopped short of endorsing the entire package before seeing the fine print.

“The plan is bold and forward thinking,” said IIABNY Chair Sharon Emek. “Eliminating such inefficiency as the Second Injury Fund and the Compensation Insurance Rating Board, while limiting the number of years a small population of claimants can receive benefits under permanent partial disability will drive substantial costs out of the system.”

The Professional Insurance Agents of New York State Inc. applauded the reforms as well.

“We are pleased that the governor and Legislature have heard our appeals to identify and address inefficiencies in the system,” said PIANY President David Dickson.

“Achieving reform is absolutely crucial to restoring integrity to New York’s workers’ compensation system.”

Topics New York Workers' Compensation