Workers Compensation

IIABNY was a key insurance and business advocate of reform legislation in 1995-96, when we established NYCAN, the New York Compensation Action Network coalition. The 1996 reforms have had a positive impact on rates, but times have changed. In 2000, New York State still ranked ninth highest in comparative workers’ compensation costs and yet our benefits are among the lowest in the nation. Our costs are approximately 30% above the national average. This system is not working well for business or workers.

While a hard market has gripped all lines of insurance, in all states commercial insurance has been particularly hard hit.

The 1996 reforms to Workers Compensation Law Section 11 prevent the liability against employers for common law indemnification or contribution, except in instances where the employee has suffered a medically proven “grave injury”, as defined in the law. However, when there is “grave injury” to support a third party action against the employer, third party suits may proceed as before. When there is no “grave injury”, but there is a contract, providing indemnity to the employer from the third party plaintiff, suit may still be brought under the general liability policy. Add to this the “absolute liability” feature of Sections 240 and 241 of the New York Labor Law and the result is that many suits formerly brought under the Employers Liability section of the Workers Compensation policy are now brought under the Contractual Liability section of the General Liability policy. This is worsened by the ever increasing number of contractual “Hold Harmless” agreements now required of all “contractors” and “suppliers”.

Many of these suits are brought under the “Safe Place to Work" laws, Sections 240 and 241 of the Labor Law, which hold the owner, contractor or subcontractor at a job site strictly liable when an employee is injured on the job in any accident involving a fall. This shift has exacerbated the affordability and availability of General Liability insurance, already affected by the nationwide hard market.

Action Needed:

IIABNY supports the following workers’ compensation reforms:

• · Enactment of objective medical guidelines developed by the American Medical Association (AMA) to determine permanent partial disability.
• · Providing scheduled benefits for some injuries and non-scheduled benefits for others, with a reasonable cap on payments for permanent partial disability. This process will reduce costs while assuring benefits to the most seriously injured workers.
• (According to a 1994 study, done by the New York Workers Compensation Rating Board for NYCAN, these 2 changes alone would reduce Workers Compensation premiums by 16.7%, probably more in today’s dollars)
• · An increase in Workers Compensation Benefits for Loss of Wages due to disability. The maximum weekly benefit has been $400, since July 1, 1992. This benefit for workers injured on the job is among the lowest in the nation and has not kept pace with inflation.
• · An increase in Disability Benefits (Article 9 of the Workers Compensation Law) for Loss of Wages due to disability. The maximum weekly benefit has been $170, since May 1, 1989. This benefit for workers injured off the job has not kept pace with inflation. The disparity between the loss of time benefits for workers’ compensation and disability may in effect “encourage” workers to claim any injury as occurring on the job.

We feel the introduction of Governor Pataki’s workers compensation package is a step forward and we look forward to working with the Governor and the Legislature to enact meaningful reform.

Significant workers’ compensation reforms to reduce the costs in the system, while at the same time increasing the benefit levels, will improve economic development in New York State by keeping jobs here. It is imperative that any increase in benefits be tied to reforms to the system.

Legislative Position Paper 2006 Session

Broker & Agent Disclosure

Auto Insurance Reform

Health Insurance Reform

Market Availability & Affordability

Workers Compensation Reform

Law Labor 240 / 241 Reform