New Workers’ Compensation Rates For Massachusetts

4% Average Rate Level Decrease Effective 9/1/03

As many of you have heard, the Division of Insurance announced a 4% average decrease in Workers’ Compensation rates to be effective September 1, 2003 for all policies that are newly issues or renewed on or after that date. The appeal period is now over, so the new rates are official. For any policy that has an effective date or Anniversary Rating Date prior to 9/1/03, the new rates will not apply until its next renewal or next Anniversary Rating Date.

The overall average decrease is 4%, but the actual change varies by industry and by class. The average rate change for the Construction Industry is a 7.1% reduction. We have attached a listing of the new rates for the most common construction classifications. The average manual rate reduction for the classes on the list is –9.03%.

With the rate change will also come a change in your Experience Modification (and ARAP surcharge). When your manual rates change the Bureau also changes the amount of losses you are expected to have during your three-year experience period, which is used in the Experience Rating formula. Therefore, even if your losses and payroll in that three-year period remained the same, if your manual rates went down, then fewer losses are expected and your Experience Modification (and ARAP surcharge) will increase.

Revised Experience Modifications and ARAP factors effective 9/1/03 and later will be issued in due course using the new Expected Loss Rates. You may have already received Preliminary Modifications, which are subject to change.

In addition to the above, the Expense Constant used in the premium calculation will increase from $244 to $264.

Please let us know of any questions or if you need to know a rate that has not been included on our list.