Several weeks ago the Maine Bureau of Insurance recommended an average decrease of 7.7% in premiums charged to Maine employers for workers’ compensation insurance. John Leonard, the CEO of MEMIC, which controls over 60% of the comp insurance market here in Maine, declared that he was “elated” and that “There is joy and jubilation in this building today.” As a result of the declining costs, last November MEMIC returned over $16 million to its shareholders in dividends on top of $13 million the prior year. Indeed, according to Maine’s Bureau of Insurance, since changes in the workers’ comp law made in 1992, premiums charged employers have declined by 52.7%.
What’s driving this decline in Maine’s workers’ comp insurance rates? Insurers and employers like to point to safer workplaces resulting in reduced injuries at work, policies returning injured workers to work sooner, and controls over health costs. Of course, safer worksites, fewer injuries, quicker returns to work, and reduced health care costs are something all Mainers can applaud.
But what insurers and employers fail to mention is that the biggest reason for the enormous decline in workers’ insurance costs here in Maine since 1992 arguably is not due to any of these reasons. Rather, the savings in workers’ compensation premiums is due to the payment of sharply reduced benefits to workers hurt on the job. Prior to the 1992 changes, benefits to workers were not capped, the duration of benefits was potentially lifetime, and employers had to pay legal fees when contesting and settling claims. Consider these changes:
- Right now the maximum benefit in Maine is $728.63 for injuries on or after July 1, 2013 and $655.77 for most injuries before that date. That means that no matter how much an employee earns, he or she cannot get anything more. Most workers get less.
- Unless a worker is totally disabled, benefits are limited to 520 weeks regardless of whether the employee’s injury continues to limit his or her ability to work or impacts earnings.
- Unlike with most other employment statutes, such as wage and hour and discrimination laws, employers and insurers no longer have to pay legal fees if they dispute a claim. As a result, many employees have difficulty finding counsel or settle their cases for much less than they actually might be worth, further reducing costs to insurers.
Our neighboring states have not enacted such draconian reductions. For example, just next door in New Hampshire, benefits as of July 1, 2012 were capped at $1354.12/week, or almost double Maine’s cap. New Hampshire also pays a minimum of $270.90 and 100% of any average weekly wage below $270.90 — Maine offers no similar protection to low wage workers. Similarly, injured workers in Massachusetts receive between $236.26 and $1181.28, far more than in Maine.
So, when you read that insurers are elated, remember you are only getting half the story. Workers’ comp savings are balanced on the back of Maine’s workers. For Maine’s injured workers, there is no joy in Mudville; the not so mighty workers have struck out.
If you believe your rights have been violated, contact us.