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Massachusetts high court faults workers’ comp rate cuts over inadequate reasoning
The ruling said the Insurance Commissioner could reject a proposed decrease but ordered a clearer explanation of the specific replacement rate after a steeper cut was imposed without showing calculations.
Massachusetts’s highest court upheld the state Insurance Commissioner’s authority to reject proposed changes to workers’ compensation insurance rates, but faulted the regulator for not adequately explaining how the specific replacement rate was determined, according to Risk & Insurance.
The dispute centered on two consecutive rate filings by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts, the state’s sole licensed rating organization. In December 2023, WCRIB proposed a statewide average rate decrease of 7.6%, to take effect July 1, 2024, while the Commissioner ordered a larger 14.6% decrease without explaining how that figure was calculated.
After that decision, WCRIB submitted a new filing in November 2024 proposing a 7.1% rate increase, but the Commissioner rejected it and left existing rates unchanged, with those rates already reflecting the 14.6% reduction, Risk & Insurance reported.
Risk & Insurance said the legal challenge focused on methodological disagreements in the rate-setting process, including how many years of historical loss data should be used to project future claims, and whether the Commissioner properly rejected WCRIB’s approach to calculating the underwriting profit component of the rates.