Amd §§27 & 86, Work Comp L; amd §§1108 & 4117, Ins L
Specifies methods of calculating deposits and reserves for the aggregate trust fund and reserves of the state insurance fund; provides that all computations made or directed by the workers' compensation board shall be on the basis of the survivorship annuitants table of mortality, the remarriage tables of the Dutch Royal Insurance Institution applicable to claims for accidents occurring on or before December 31, 2023, and beginning January 1, 2024 and on January 1 of each tenth year thereafter, the United States life table for the total population published by the department of health and human services and the remarriage table published by the department of health and human services and the remarriage table published by the United States railroad retirement board applicable to claims for accidents occurring on or after January first of the year following the adoption of any revision of such tables; makes related provisions.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8936
SPONSOR: Bronson TITLE OF BILL:
An act to amend the workers' compensation law and the insurance law, in
relation to specifying methods of calculating deposits and reserves for
the aggregate trust fund and reserves of the state insurance fund
PURPOSE OR GENERAL IDEA OF BILL:
This bill would update the discount rates for the New York State Insur-
ance Fund's reserves and deposits.
SUMMARY OF PROVISIONS:
Section one would amend Subdivision 5 of Section 27 of Workers' Compen-
sation Law changing the computation of payments into the Aggregated
Trust Fund to use modern mortality and remarriage tables utilized by the
Department of health and human services and published by the United
States railroad retirement board.
Section 2 would amend Subdivision 7 of Section 27 of Workers' Compen-
sation Law to clarify that the computed payment amount based on the
updated computation formula shall be applicable to the calculation of
the deposit for the claim on which such deposit is based.
Section 3 would amend section 86 of Workers' Compensation Law by chang-
ing the reserve discount rate used to calculate reserve levels for the
State Insurance Fund's Workers' Compensation Fund. It would remove the
requirement that the state insurance fund reserves be discounted by 5%
and instead uses the same reserve standard applied to private workers'
compensation insurers.
Section. four would amend section 1108 of the Insurance Law to add
further sections to the list of exceptions therein.
Section five would amend section 4117 of the Insurance Law to expand the
section to apply when the superintendent judges the loss and loss
expenses reserves of any property/casualty insurance company is doing
business of the New York State Insurance Fund.
Section six would establish the effective date.
JUSTIFICATION:
The State Insurance Fund (SIF) is the largest provider of workers'
compensation insurance in New York State. Its solvency is key for New
Yorkers and its businesses to always have a lifeline in case of injury
or disability. Currently SIF uses a century old mortality and remarriage
table to compute deposits into the Aggregated Trust Fund. The current
table is outdated and has led to an under payment of deposits into the
fund. Similarly, the current rate it.applies for its workers' compen-
sation fund (WCF) needs updating too. SIF argues that WCF's reserves are
currently set at a discounted rate of five percent but that such reserve
was set in 1989 when interest rates were higher than they are now.
This bill would address both issues by permitting SIF to use modern
mortality and remarriage tables to calculate deposits and reserves for
the Aggregate Trust Fund, and by removing that discounted rate and using
the same reserve standard private workers' compensation insurers use
under the Insurance Law.
PRIOR LEGISLATIVE HISTORY:
2021-2022: A7505 - Referred to Labor
2023-2024: A1996 - Referred to Labor; enacting clause stricken
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act would take effect January 1, 2024.
STATE OF NEW YORK
________________________________________________________________________
8936
IN ASSEMBLY
January 30, 2024
___________
Introduced by M. of A. BRONSON -- read once and referred to the Commit-
tee on Labor
AN ACT to amend the workers' compensation law and the insurance law, in
relation to specifying methods of calculating deposits and reserves
for the aggregate trust fund and reserves of the state insurance fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 5 of section 27 of the workers' compensation
2 law, as amended by chapter 6 of the laws of 2007, is amended to read as
3 follows:
4 5. All computations made or directed by the board shall be upon the
5 basis of (i) the survivorship annuitants table of mortality, the remar-
6 riage tables of the Dutch Royal Insurance Institution applicable to
7 claims for accidents occurring on or before December thirty-first, two
8 thousand twenty-four, and (ii) beginning January first, two thousand
9 twenty-five, and on January first of each tenth year thereafter, the
10 United States life table for the total population published by the
11 department of health and human services and the remarriage table
12 published by the United States railroad retirement board applicable to
13 claims for accidents occurring on or after January first of the year
14 following the adoption of any revision of such tables as provided in
15 this subdivision and interest at three and one-half per centum per annum
16 on claims based on accidents occurring up to and including June thirti-
17 eth, nineteen hundred thirty-nine, at three per centum per annum on
18 claims based on accidents occurring from July first, nineteen hundred
19 thirty-nine up to and including August thirty-first, nineteen hundred
20 eighty-three, at six per centum per annum on claims based on accidents
21 occurring from September first, nineteen hundred eighty-three up to and
22 including December thirty-first, two thousand and at the industry stand-
23 ard rate on claims based on accidents occurring thereafter, except (a)
24 that computations of present values of death benefits required to be
25 paid into the aggregate trust fund by an insurance carrier which is a
26 stock corporation or a mutual association shall be based, in the case of
27 a dependent parent, grandparent, blind or physically disabled child or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06279-02-4
A. 8936 2
1 spouse, upon said table of mortality disregarding possible change in or
2 termination of dependency, with interest at three and one-half per
3 centum per annum on claims based on accidents occurring up to and
4 including June thirtieth, nineteen hundred thirty-nine, at three per
5 centum per annum on claims based on accidents occurring from July first,
6 nineteen hundred thirty-nine up to and including August thirty-first,
7 nineteen hundred eighty-three, at six per centum per annum on claims
8 based on accidents occurring from September first, nineteen hundred
9 eighty-three up to and including December thirty-first, two thousand and
10 at the industry standard rate on claims based on accidents occurring
11 thereafter and (b) that computations of present values of permanent
12 partial disability benefits awarded for a definite number of weeks shall
13 be on the basis of annuities certain with interest at three and one-half
14 per centum per annum on claims based on accidents occurring up to and
15 including June thirtieth, nineteen hundred thirty-nine, at three per
16 centum per annum on claims based on accidents occurring from July first,
17 nineteen hundred thirty-nine up to and including August thirty-first,
18 nineteen hundred eighty-three, at six per centum per annum on claims
19 based on accidents occurring from September first, nineteen hundred
20 eighty-three up to and including December thirty-first, two thousand and
21 at the industry standard rate on claims based on accidents occurring
22 thereafter.
23 § 2. The closing paragraph of subdivision 7 of section 27 of the work-
24 ers' compensation law, as amended by chapter 6 of the laws of 2007 and
25 as further amended by section 104 of part A of chapter 62 of the laws of
26 2011, is amended to read as follows:
27 Such additional payments shall be required until the surplus of the
28 fund equals or exceeds one per centum of the total outstanding loss
29 reserves as shown by three successive annual reports of the fund to the
30 superintendent of financial services and such additional payment shall
31 be required as a payment upon each award based on an accident occurring
32 prior to July first next succeeding the third such annual report, but
33 not as a payment upon any award based on an accident occurring on or
34 after said July first; provided, however, that if and when the surplus
35 of the fund as shown by any annual report thereafter shall be less than
36 one per centum of the total outstanding loss reserves, then the addi-
37 tional payments as provided in paragraphs (a), (b), (c) and (d) of this
38 subdivision shall be resumed and shall be payable upon any award based
39 on an accident occurring on or after July first next succeeding the
40 close of the year for which such annual report is made. Thereafter, the
41 suspension or resumption of additional payments as required by this
42 subdivision shall be governed by the foregoing provisions. Such loss
43 reserves shall be computed based upon the tables specified in subdivi-
44 sion five of this section applicable to the calculation of the deposit
45 for the claim on which such deposit is based and interest at a standard
46 to be determined by the superintendent of financial services by regu-
47 lation.
48 § 3. Section 86 of the workers' compensation law, as amended by chap-
49 ter 7 of the laws of 1989 and as further amended by section 104 of part
50 A of chapter 62 of the laws of 2011, is amended to read as follows:
51 § 86. Catastrophe surplus and reserves for workers' compensation. Ten
52 per centum of the premiums collected from employers insured in the fund
53 for workers' compensation shall be set aside for the creation of a
54 surplus until such surplus shall amount to the sum of one hundred thou-
55 sand dollars, and thereafter five per centum of such premiums, until
56 such time as in the judgment of the commissioners such surplus shall be
A. 8936 3
1 sufficiently large to cover the catastrophe hazard. Thereafter the
2 contribution to such surplus may be reduced or discontinued conditional
3 upon constant maintenance of a sufficient surplus to cover the catastro-
4 phe hazard. Reserves shall be set up and maintained adequate to meet
5 anticipated losses and carry all claims and policies to maturity, which
6 reserves shall be computed [to reflect the present values, at five
7 percent interest per annum, of the determined and estimated unpaid loss-
8 es, and other requirements computed in accordance with such rules as
9 shall be approved by the superintendent of financial services] pursuant
10 to subsections (d) and (e) of section four thousand one hundred seven-
11 teen of the insurance law.
12 § 4. Subsection (c) of section 1108 of the insurance law, as amended
13 by section 38 of part SS of chapter 54 of the laws of 2016, is amended
14 to read as follows:
15 (c) The state insurance fund of this state, except as to the
16 provisions of subsection (d) of section two thousand three hundred thir-
17 ty-nine, section three thousand one hundred ten, subsection (a), para-
18 graph one of subsection (b), paragraph three of subsection (c) and
19 subsection (d) of section three thousand two hundred one, sections three
20 thousand two hundred two, three thousand two hundred four, subsections
21 (a) through (d) of section three thousand two hundred twenty-one,
22 subsections (d) and (e) of section four thousand one hundred seventeen,
23 subsections (b) and (c) of section four thousand two hundred twenty-
24 four, section four thousand two hundred twenty-six and subsections (a)
25 and (b), (g) through (j), and (n) of section four thousand two hundred
26 thirty-five of this chapter and except as otherwise specifically
27 provided by the laws of this state.
28 § 5. Subsection (e) of section 4117 of the insurance law, as amended
29 by chapter 11 of the laws of 1986, is amended to read as follows:
30 (e) Whenever in the judgment of the superintendent, the loss and loss
31 expense reserves of any property/casualty insurance company doing busi-
32 ness in this state or of the state insurance fund of this state calcu-
33 lated in accordance with the foregoing provisions are inadequate or
34 excessive, [he] the superintendent may prescribe any other basis [which]
35 that will produce adequate and reasonable reserves.
36 § 6. This act shall take effect January 1, 2025.
