The Commissioner of Insurance Approves an Average Decrease of 10.2% in Workers’ Compensation Rates Effective July 1, 2023

Beginning July 1, workers' compensation rates in Massachusetts will decrease by an average of 10.2%, a more significant reduction than the industry suggested.  Massachusetts insurers sought to have the average statewide workers’ compensation rates cut by 4%, but Attorney General (AG) Andrea Campbell argued for a larger decrease as she had identified shortcomings in the industry’s projections.  An agreement on the reduction amount was ultimately reached between the Attorney General's Office, the Workers' Compensation Rating and Inspection Bureau (WCRIB), and the Division of Insurance’s (DOI) State Rating Bureau.  DOI’s Commissioner, Gary Anderson, approved the reduction, which is expected to save employers approximately $130 million.  

The updated rates will apply to new and renewal policies starting on or after July 1, 2023, including those in the assigned risk pool.  The overall average decrease of 10.2% in the existing workers’ compensation average rates will vary by class.  Last year, the Commissioner authorized an average decrease of 3.46%, effective July 1, 2022, following WCRIB's recommendation of a 2.78% average increase.

WCRIB has published the new rates via Circular Letter No. 2413, which will be effective on July 1, 2023.  Typically, the industry bureau would base its 2023 filing on policy year 2020 data.  However, it opted for 2018 and 2019 data, as the 2020 data was heavily influenced by the COVID-19 pandemic.  The bureau believed that the 2018 and 2019 data better reflected the current employment and economic climate.

Anticipating continued stabilization at higher unemployment levels, the bureau assigned a 75% weight to policy year 2018 and a 25% weight to policy year 2019. Massachusetts mandates that workers' compensation carriers submit new rates at least every two years. Commissioner Anderson has instructed the industry to file new rates in December for July 2024, allowing future rates to account for changes in business operations due to the pandemic and potential impacts on workers' compensation rates.

The Commissioner emphasized that it is not reasonable to assume that the 2020 data, now considered anomalous, will always be treated as such.