Fifteen years ago, Maine 's comp rates were the highest in the nation and twice as high as #2. In the fifteen years since the reforms, Maine is now closer to the middle of the pack in several (but not all) studies.  In recent years, there has been much less legislative activity so the law itself is stable, but rules and regulations passed by the Workers' Comp Board are having significant impact on the system.  

The new board structure may have put an end to deadlock, but it has become more and more clear that the Executive Director controls the votes as the tie breaker. For most of the past year, there have been only two Management members on the Workers' Comp Board. Unless all members vote unanimously, there is liable to be a 4-2 (or a tie) vote. One side is satisfied, and the other is not. Decisions do get made, but the tension continues.

Will Duration Ever Reach 520 Weeks?

It is important to understand that there is a financial impact on all employers for any increase in the duration of benefits.

In accordance with the directives of Section 213 of the Workers' Compensation Statute, every year the WCB hires an actuary to determine if the frequency of claims in Maine is above or below the national average. If it is below the national average, the duration of benefits for people who are partially disabled is extended an additional 52 weeks. In 1993, the benefit duration started at 260 weeks. The first actuarial study occurred after the first five years, and in 1999 and 2000, the benefits were extended. Benefit duration was extended again in 2007; the current duration of benefits is 412 weeks.

In anticipation of reaching 520 weeks of duration, insurance companies adopted 2.7% escrow accounts. The escrow amount covers the contingency that the Section 213 maximum benefit duration will be extended from 364 weeks to 520 weeks for injuries that occur in policy year 2006. Despite claims that employers have already provided funds for extensions and, because of that, extensions will have no financial impact, if the extension does not occur, insured employers will receive refunds . If the benefit duration extension does occur, the premiums will be retained by the insurers and paid out to injured workers. Any increase in duration will have a direct impact on self-insured employers who have not set aside any such accounts.  

“ Carriers in the Maine Insurance Market” (B ased on 2006 and 2007 reports by the Staff of the Maine Bureau of Insurance to Legislators.)  

Since 2000, 57 more insurance carriers have entered Maine workers' Compensation market. In 2006, there were 267 carriers, but the top ten companies combined write nearly 83% of the business. MEMIC alone writes almost 65%. No carrier outside of the top 10 account for more than 1% of the written premium. The Maine 's workers' compensation insurance market is becoming more concentrated (i.e., more business written by fewer carriers or groups). Though there are more carriers being licensed and there are no barriers for carriers to enter the market, Maine Employers' Mutual Insurance Company (MEMIC) is underwriting a large portion of business.

Self-insured employers represent 40.3% % of the overall workers' compensation market in Maine , and self-insurance continues to be a viable alternative to the insurance market for some employers. The remaining 59.7% is with insurance companies. For example, MEMIC has 64.8% of the 59.7% for insurers or 38% of the workers' comp coverage in Maine . The next highest insurance company share is 4.3% of the 59.7%.

Although Maine 's market is becoming more concentrated and MEMIC writes a large volume of business, there are still many insurers writing some workers' compensation coverage in Maine and self-insurance remains a viable alternative for other Maine employers. Insurers, however, are being more conservative in the selection of business that they choose to provide coverage for or to renew. An insurer can decide to non-renew business for any reason as long as it provides the policyholder with the statutorily required advance written notice. Furthermore, insurers are less willing to offer underwriting discounts and some employers have been moved to higher rating tiers. The end result is that premiums for those employers are increasing.

Why are some companies experiencing higher premiums?

Employers that maintain a safe work environment and control their losses should continue to see insurers competing for their business . New businesses and businesses with unfavorable loss experience have few options available. With relatively low investment returns, many insurers have been less likely to offer credits to attract or retain market share. As a result, many employers have experienced higher premiums. (Prior to 2000, carriers had been discounting premiums by applying schedule rating credits, by issuing dividends and by using lower rates. In the current market, insurers are less likely to offer discounts in order to capture or retain business.)

The impact of 9/11: The Terrorism Risk Insurance Act (TRIA), signed into law in 2002, established a temporary Federal program under which the federal government shares in the cost of terrorist attacks with the insurance industry. Its intent is to protect consumers and insurers by addressing market disruptions and ensuring the continued availability and affordability of insurance for terrorism risk. It also allowed for a transitional period for the private markets to stabilize, resume pricing of such insurance, and build capacity to absorb any future losses. In workers' compensation, losses may not be excluded from coverage due to terrorism. In late 2005, Congress voted to extend TRIA until December, 31, 2007. Since September 2001 reinsurance contracts have excluded coverage for terrorist acts, though primary insurers are still liable for that exposure. This could further disrupt the market since many insurers may decide against writing accounts where there are high concentrations of employees at a single location.

Frequency of indemnity claims continues to decline and this helps keep loss costs down. Conversely, costs for indemnity (lost time wage replacement) and medical claims continue to increase. Medical benefits have increased a percentage to 52% percent of the total benefit costs in Maine and medical inflation is greater than the Consumer Price Index.

Employer assessments for the Worker's Comp Board will increase.   The Workers' Compensation Board had gotten into a pattern of budget increases . The Legislature is inclined to support these budget increases by changes in the statute. Any budget increases would be funded by an increased assessments on employers and insurers and not come out of the General Fund.