A Review of Current Workers Compensation Costs in New York

Following a period of accelerating workers compensation costs in New York from the early to mid-2000’s, material legislative changes were enacted during 2007 with the intent to reduce costs, and also to address the unreasonably low (when benchmarked against other states and jurisdictions) maximum (and minimum) weekly wage replacement benefits.

The expectation had been that the combined impact of the legislation would significantly reduce workers compensation costs in New York. In response to the legislation, workers compensation loss costs1 were reduced by 18.4% effective October 1, 2007, with an additional reduction of 6.4% implemented effective October 1, 2008.

As post-legislation claims data emerged it became apparent that the anticipated cost reduction would not materialize. Over the past six years, workers compensation loss costs in New York increased to a cost level greater than the cost level prior to the 2007 legislation. Equally important, assessments2 required to fund various workers compensation programs in New York have increased as well. Currently, the combined cost of workers compensation benefits and related expenses, with assessments, is at a level approximately 8% to 9% greater than pre-legislation costs.

The purpose of this paper is to summarize the 2007 legislation and its intent, explore potential reasons as to why both claim costs and assessments have increased since 2007, and, in the context of current cost levels, the intent and expected impact of legislation passed earlier this year as part of the budget proposal by the Governor’s office.

A Review of Current Workers Compensation Costs in New York