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Massachusetts workers compensation insurance rates to increase

Workers compensation rates for businesses will rise by on average 1.5 percent starting July 1, the first state-approved increase in 15 years.

The Massachusetts Division of Insurance announced Wednesday that it had reached a settlement with the Workers Compensation Rating and Inspection Bureau to increase the premium costs.

The workers compensation bureau, which represents insurers, had initially requested a 6.4 percent increase to cover projected costs and profits.

The settlement is far smaller than the initial request and state regulators took credit for saving businesses $50 million with the lower rate.

“In a time when the costs of doing business continue to be a challenge, I’m pleased that our State Rating Bureau worked convincingly to broker an agreement on this important and mandatory insurance coverage,” said Daniel Judson, the Massachusetts insurance commissioner.


The last time Massachusetts approved a rate increase was in 2001, when premiums went up about 1 percent.

“The filing is reflective of the trend and where the losses have been,” said John Murphy, the executive director of the Massachusetts Insurance Federation, an industry lobbying group. “We would have preferred a number closer to the original filing. But we’re satisfied with the outcome.”

The insurance companies needed the higher rates to cover the increasing medical costs of treating workplace injuries, Murphy said. Wages in Massachusetts have also been increasing since the recent recession, and insurers have to spend more to replace the lost earnings of workers when they are injured, he said.

According to state officials, the average company policy costs about $5,000 annually, but varies widely based on the risk of their business and the employees being covered.

The workers compensation bureau has routinely asked for rate increases in recent years, but state regulators have rejected the proposals, arguing that they weren’t justified based on the profits of the insurance industry. They also said a rate increase would hike the cost of doing business in Massachusetts, particularly during the economic downturn.


The Massachusetts Attorney General’s Office had been a vocal opponent of recent rate increase requests. After reviewing the data, Attorney General Maura Healey said her office found that the larger increase that insurers wanted wasn’t justified and could have cut jobs.

Healey said in a statement that she agreed to the lower rate increase, because it “keeps wages in the pockets of hard-working residents, and ensures that the insurance market remains competitive.”

Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.