NYSIF Offers Q&A on Workers Comp Assessment Changes

July 25, 2013

The New York State Insurance Fund has posted answers to frequently asked questions about the upcoming assessment changes in the 3rd edition of its 2013 quarterly newsletter.

Some key points include:

  • Although it seems that NYSIF’s assessment advantage was coming to an end because NYSIF is now required to pay assessments to the workers’ comp board like all private carriers, NYSIF states below that they will ensure that current policyholders do not pay higher assessment charges due to the change in the assessment formula for calendar years 2014 and 2015 even though their policyholders will see one assessment charge like all other private carriers.
  • The other important point for brokers to keep in mind is that although as of Oct. 1, 2013, New York loss cost increases will rise by 9.5%, the new assessments will be taking place as of Jan. 1, 2014, at which time assessments are expected to decrease to somewhat offset the increase in loss costs. Nevertheless, if you have a client renewing between Oct. 1, 2013 (when new loss cost rates are taking effect) and Jan. 1, 2014, your client will see only increases until their next renewal. They will see the increase of 9.5% in loss costs and have no relief of lower assessments that will only start taking place in January 2014.
  • The bottom line is that no matter when your clients are renewing, everybody knows that rates have gone up and workers’ comp premiums are on the rise.  Why not show your clients and prospects that you’re doing everything possible to help them lower their workers’ comp premiums. Partner up with Apex Services for our workers compensation premium recovery service and maintain current clients and win new business.


NYSIF Workers’ Comp. Advisor – 3rd Quarter 2013

NYS 2013 Workers’ Comp. Reform

Questions and answers about the 2013-14 Business Relief Act and what it means to NYSIF customers

The Business Relief Act signed into law by Governor Andrew M. Cuomo as part of the 2013-14 NYS Budget includes sweeping reforms to the state workers’ compensation system projected to save $800 million for employers. Here’s a summary of what the changes mean for NYSIF customers.

Workers’ Comp. Board Assessments

How will the new assessment work?

The Workers’ Comp. Board (WCB) will charge employers one unified annual assessment starting Jan. 1, 2014. WCB will determine an assessment methodology that charges all employers based on a common factor, such as premium, and publish this information by Nov. 1, 2013, and annually thereafter. All carriers, including NYSIF, must now remit the assessment amount to the WBC as it is collected.

This one unified assessment includes, but is not limited to, assessment for the Special Fund for Disability Benefits, and for WCB administrative costs related to the Disability Benefits Law, the Volunteer Firefighters’ Benefit Law, and the Volunteer Ambulance Workers’ Benefit Law.

Will employers see higher assessment rates with the new methodology?

For NYS employers in general, the change in assessment methodology may result in some employers paying a slightly higher or lower share of the overall assessment. However, changes in the law regarding the Fund for Reopened Cases (FRC) [Section 25-a] and the Special Disability Fund (SDF) [Section 15(8)] are expected to reduce overall assessment costs, projecting a savings of $800 million for employers.

How will this impact NYSIF policyholders?

NYSIF policyholders will see a change in their bills to reflect the new assessment procedures starting with policies that take effect or renew on or after Jan. 1, 2014. As a service to customers, NYSIF will ensure that current policyholders do not pay higher assessment charges due to the change in the assessment formula for calendar years 2014 and 2015.

How is this different from the way NYSIF now collects assessments?

Previous, NYSIF charged policyholders for assessments and reserved funds for future assessments. NYSIF grew its reserves for assessments through prudent investments and containment of its administrative costs. In recent years, NYSIF did not charge policyholders for the full cost of the assessments and, instead, paid a portion for the annual assessments for its customers out of these reserves. Starting in 2014, NYSFI must charge policyholders for all assessments and remit the payments to the WCB as they are collected.

Will employers receive an itemized accounting of assessment components?

No. The WCB is combining the assessments into a single methodology to improve administrative efficiency. The assessment will show up as a single charge on policyholders’ bills. The WCB plans to publicize the various components of the assessment and how the assessment is calculated.

What changes were made to Section 25-a?

FRC will close to new cases on Jan. 1, 2014. Under 25-a, carriers could transfer liability for certain claims to FRC after seven years from the date of accident and three years since the last payment of compensation to the claimant. FRC, which does not exist in most other states’ workers’ compensation systems, generated significant litigation and costs for a small number of claims. Private carriers and NYSIF now assume the responsibility for handling these claims on behalf of their respective policyholders. The closure of FRC is expected to produce savings for businesses while having no impact on injured workers.

What will happen to Section 15(8) Special Disability Fund cases?

Assessments for SDF (i.e., second injury fund) will be made against affected employers rather than against insurers and Relief Act directs NYSIF to transfer these reserves to the WCB Chair for distribution to the state’s General Fund as administrated by the New York State Director of the Budget.

The monies released became available by the elimination of reserves held by NYSIF for future payments of state assessments. Any reserves held by NYSIF for future claimant benefits and medical costs remain intact and are not impacted. Furthermore, this transfer does not affect NYSIF discounts and dividends. NYSIF’s commitment to pricing policies and implementing dividends, discounts or differentials based solely upon risk and experience remains the same.

How does the Act affect NYSIF investments?

The Workers’ Compensation Law previously limited investments that NYSIF could make to grow its surplus and reserves. The Business Relief Act permits NYSIF to invest up to 10% of surplus in securities of American institutions, regardless of the company’s debt rating, and 15% of surplus under a prudent person standard.

Minimum Benefit Increase

The minimum weekly benefit increases from $100 to $150 for all injury claims on or after May 1, 2013, subject to existing rule that compensation benefits plus current earnings (or earning capacity) may not exceed one’s average weekly wage prior to the accident.


How does the state ensure that employers correctly report both their occupational classifications and their payroll?

The WCB currently collects this information from all employers. The legislation gives the WCB the power to audit all employers, including self-insured employers, and thereby ensure the accuracy of the data used in the assessment calculations. Moreover, the legislation permits the WCB to conduct periodic audits of any employer, private insurer, or NYSIF regarding any assessment payment. It also provides for payment of any amount underpaid, along with 9% interest. Any insurance carrier or employer that knowingly makes a material misrepresentation of information concerning WCB assessments may be subject to a class E felony.

Prior law requires the WCB to asses a penalty of $2,000 for each 10-day period that an employer fails to secure workers’ compensation coverage. The legislation permits the WCB to assess a lesser penalty, allowing flexibility to assist employers with compliance.

What happens if a policyholder does not pay its assessment?

All carriers, including NYSIF, are now required to treat the non-payment of an assessment by a policyholder the same as a non-payment of premium for cancellation purposes. An employer’s policy may be cancelled for not paying its premium or state assessment if notice is given.