The Massachusetts Commissioner of Insurance has approved an 11.1% decrease in average rates for industrial classes and an 11.5% decrease for others. The Workers Comp rates for MA are established and set by the state regulators; even the Attorney General gets involved. In the past two years, the state elected to make no changes to rate. For this year’s review, they engaged in a formal actuarial study to determine if any rate changes could be deemed appropriate.
It’s important to note that while the overall decrease was 11.1%, only some classes will pay a reduced rate. Other classes will see an increased rate as of 7/1/18. A few examples include some municipal employee classes, many driver classes, and several manufacturing classes, just to name a few.
Now that the Workers Comp rate changes have been approved, how will it impact your business? The state usually changes the rating factors used to derive the experience mods. This means if rates go up, then the experience mods should drop – and vice versa if the rates go down – in reflection of that change. Traditionally, they do not change the rates without also changing the experience mod rating factors, but we cannot dismiss the possibility of such a development. We expect some clients will see a net neutral change, some will get a slight increase, and others will see the full effect (rate plus experience mod change).
NOTE: As evidence of that cause and effect, any Experience Modifications that are effective 7-1-18 and later will have a note at the bottom which states: “Rating is preliminary due to pending rate revision”.
With any dramatic rate change such as this, we traditionally see some marketplace disruption with carriers. Most of those carriers who will still write the coverage will refine their underwriting criteria to an intense degree. It will be most interesting to see how the pending change might affect the underwriting appetite in Massachusetts.
The Gaudreau Group continues to monitor this situation. The good news is Gaudreau Group clients enjoy access to virtually every market and program that would contemplate Massachusetts Workers Comp. That means we are better poised to manage through the vagaries of a new rate filing than any competitor.
For a full listing of the rate changes by class, see the WCRIBMA Bulletin from March 26, 2018.