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Retailers bash bid for 10% workers’ comp rate hike

State Fund overcharges demand full actuarial study

ALBANY, NY – As New York’s Department of Financial Services reviews input from its June 27 hearing on a recommended 9.8 percent rate increase for workers’ compensation insurance, the Retail Council of New York State wants instead an industry-wide actuarial study before the DFS considers any further rate increases.

The Retail Council said no review would be complete without a careful examination of the New York State Insurance Fund (SIF), a major provider of workers’ compensation insurance in the state.

“New York employers continue to endure a chronic and significant workers’ comp crisis,” said Retail Council President and CEO Ted Potrikus. “Rates in the private market continue to go up while coverage opportunities continue to decline. The State Insurance Fund keeps shifting rates, dividends, reserve balance requirements, and other rate components without regard for the employers they affect and without statistical justification.”

Among the issues driving the Retail Council’s concern and request for SIF inclusion in such an industry-wide study is recent legislation allowing New York State to derive budget funds directly from surpluses in the SIF.

“That law alone seems to make SIF less an insurer than they are an annex of the Division of the Budget. The Governor’s office shifted $1.75 billion from the SIF to the General Fund in 2013 and wrote it off to ‘assessment reserves held by the SIF that would no longer be necessary.’ That’s an open-ended grab that they can now repeat without legislative approval. Of course they want to sock away as much money into the SIF as they can – money that should stay with the state’s employer community.”

Mr. Potrikus cited an independent actuarial analysis commissioned by the Retail Council and a second employer group in 2014 and updated in 2016 which showed some Council members overcharged by the SIF by as much as 20 percent. The groups commissioned the study in conjunction with their effort to create a new insurance entity to provide workers’ compensation at a lower cost.

“First we find out that the SIF is overcharging our members, and then they slam the brakes on the new entity we tried to form by rejecting our repeated overtures to work together to provide our members with meaningful rate relief,” Mr. Potrikus said. “Making matters worse, they then put up a roadblock to employer capital being held by the SIF.”

“That about face tells us that neither the SIF nor the DFS have an interest in helping employers,” he said. “I think they’re far more interested in turning the State Insurance Fund into some kind of Wall Street firm designed to maximize investments for future general fund raids.”

Mr. Potrikus added, “Clearly, there is something wrong in the current workers’ compensation marketplace. Band-aids aren’t working. We had a long-term solution to help Main Street retailers and restaurants, and there was zero interest in helping us reach that goal. Perhaps the moratorium and study we want will shed light on what’s going on.”

New York has the obligation to review and either accept or reject the rate filing of the rating board. The Retail Council is hoping the application will be rejected on the basis of a lack of credible information, and that such decision will be the catalyst for the unprecedented study they urge.

 

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About the Retail Council of New York State

New York’s voice of retail represents thousands of member stores of all size and variety, offering money-saving group programs and government relations to its members. For more information, visit retailcouncilnys.com.