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Letter from the President: The Workers' Comp Crisis
December 18, 2013
WORKERS' COMP CRISIS
Starting Jan. 1, 2014, the Workers' Compensation rates covering the employees of the racing industry in New York will increase by 50%. The Class Code, which is set by the New York Compen-sation Insurance Rating Board to classify the degree of workplace risk exposure for different jobs, has been raised from 13.2% to 19.92% of the payroll for our employees. That increase includes everyone from assistant trainers, grooms and hotwalkers to jockeys and exercise riders.
For those trainers using the New York State Insurance Fund (NYSIF), legislation passed earlier this year paved the way for an additional assessment fee of up to 20%. The NYSIF is proposing a 10% assessment charge for 2014, with the probability of charging the full 20% in 2015. That fee is applied to the full amount of the premium paid--for example, if you are paying a net premium of $100,000 for your 2014 Workers' Comp policy, the assessment fee will be an added $10,000.
Including the increase in the base rate and the new assessment fee, the cost of your Workers' Comp policy would effectively jump from $66,265 in 2013 to $110,000 for 2014.
In essence, New York went from a Worker's Compensation attractive state to one that is punitive, adding yet another obstacle to those wishing to do business here.
The increase has also affected the New York Jockey Injury Compensation Fund (NYJICF), the entity that purchases Workers' Comp coverage for New York's jockeys, apprentice jockeys and exercise riders. The proposed 2014 NYJICF premium from the NYSIF is $4.8 million, an increase of $1.7 million on the premium of $3.1 million paid by owners and trainers for the 2013 policy. We on the Board of the NYJICF are working overtime on negotiations with the NYSIF to get the 2014 premium lowered.
This is what the New York Thoroughbred Horsemen's Association is doing with regard to Workers' Comp policies for employees not covered by the NYJICF:
1) We have secured the services of two agencies expert in reviewing the loss runs (details of insurance claims by an individual or business) and reserves (the projected payout on open claims, set by the insurance company) recorded by the insurance companies for Workers' Comp policies. These agencies work on contingency fees--their job is to get reserves reduced, and they are paid only if the client (the trainer, in our case) receives a refund. We strongly encourage all trainers to take advantage of this service. It is doubtful that many of our policies have ever been reviewed. You simply provide the agency with your insurance information and completed authorization forms.
2) We are looking at two different ways of setting up a group policy to try to take advantage of the economy of scale.
a) The first is setting up a safety group--that would entail voluntary enrollment in a policy underwritten by a major carrier and administered by a third party. Legislation passed earlier this year make this a possibility, and a potentially attractive option.
b) The second is forming a sister group to the NYJICF. This group would involve mandatory enrollment--all New York trainers would be required to secure Workers' Comp insurance through this group. This option would also require a supplement of approximately $2 million from the top of the purse account, which is estimated to be $160 million in 2014.
3) We are in ongoing discussions with NYRA, their outriders and their insurance experts on ways to make the backside and the racetrack a safer workplace.
These projects have the potential to significantly lower the cost of Workers' Compensation insurance for New York trainers and, by extension, New York owners.
Make no mistake about it, without either of these initiatives, the cost of racing in New York, for the trainers and for their owners, is going to go up, significantly. This will force trainers to increase their day rates just to cover the increase in their insurance premiums. While the purses offered certainly make New York an attractive state in which to do business, NYTHA will continue to fight the battle to contain the cost of doing business, so those purses will actually have a positive impact on the bottom line for everyone.
Rick Violette Jr.
Go to Quick Links at www.nytha.com for agreement and authorization forms, or contact the NYTHA office at Aqueduct, (718) 848-5045 or [email protected], to schedule a Review of your Workers' Comp policy.