As New Yorks workers compensation reform moves forward, it is difficult to determine if the end product will achieve the anticipated long-term effect. Everyone praised Governor Eliot Spitzer and the state Legislature for passing this much-needed legislation when it was first unveiled. Finally, the broken New York workers compensation system would be fixed. Injured workers could expect to see increased benefits, and New York businesses could expect to see reduced insurance costs. Everyone was hopeful the changes would signal increased competition.

Unfortunately, there are a number of areas of concern that have been raised relative to the implementation of the reform details, and they are:

Will cost-cutting measures support the current rate reduction and allow for future rate reductions or rate stabilization? In early August, Robert Hartwig, of the Insurance Information Institute, was quoted in National Underwriter as saying that while the workers comp market will continue to perform well, operating results and profitability erosion are beginning to appear. He said erosion will probably continue for the next four to five years. It would appear that continued rate reductions or rate stabilization may not be possible if Hartwigs predictions are correct;

Will private carriers be adversely impacted by the newly-created Aggregate Trust Fund and find themselves uncompetitive or unwilling to write workers compensation coverage?

Will the state Workers Compensation Board modify its stance on out-of-state employers having to provide full statutory coverage for all employee contacts in New York, whether casual or not? Certainly, the intention was not to require employees of an out-of-state employer attending a conference in New York or driving through the state to be provided full statutory coverage;

Will New York State Insurance Department Superintendent Eric Dinallos recent decision to end the state Compensation Insurance Rating Boards role in filing rate requests and begin developing loss costs as the basis for formulating specific rates lead to a more competitive environment? Will he choose to utilize data and statistics from the National Council on Compensation Insurance in the future for New York?

Why is the New York State Insurance Fund being allowed to charge only 6.6 percent for the state assessment when private carriers are forced to pay 18.6 percent (changing to 15.5 percent effective October 1)? Is the reduced charge only available to members of a safety group? What is the reasoning behind this reduction? Is the intention to give an even greater competitive advantage to NYSIF? If so, we would hope that there is also an intention to pay agents and/or brokers a commission for writing coverage in the State Insurance Fund.

Everyone would agree that employee misclassification as an independent contractor is an issue that needs attention. IIABNY worked diligently several years ago in helping amend the Workers Compensation Law to clarify when an agent or broker is an independent contractor and not an employee. It would make sense that a similar clarification for other business classes might be in order. Obviously, when businesses fail to follow the definition as outlined, the Joint Enforcement Task Force should step in and take the steps necessary to immediately correct the situation.

As I mentioned in the beginning of this column, workers compensation reform legislation was passed to fix New Yorks ailing system. I believe it has the potential to do so as long as everyone involved focuses on the reason the reforms were passed. The cost of coverage needs to fall while benefit levels for injured workers should rise. We need to make sure every worker is provided coverage and receiving it, while the appropriate premium is being paid. The method for determining workers compensation rates should also change to provide for open competition and create a healthy environment for writing this kind of coverage. I sincerely hope, when all is said and done, these objectives will be achieved and a healthier workers compensation system will benefit all New Yorkers, employees and employers alike. [IA]

As IIABNY member advocate and assistant vice president of member programs, Jamie Deapo acts as communicator between agent, company, and trade association. His 15 years of experience as an independent agent coupled with a background in underwriting and marketing for insurance companies has given him a well-rounded perspective. A daily dose of conversation with independent agents from every corner of New York helps him understand the issues and concerns of the day. Deapo is also the outspoken voice on IIABNYs Word on the Street Podcast. Listen to these candid conversations at www.iiabny.org, by clicking on the News link on the left-hand side of the homepage, then Newsletters and Publications and Word on the Street Podcast.