PORTLAND, Maine — Despite a recommendation from the state, the Maine Employers’ Mutual Insurance Co., commonly referred to as MEMIC, has decided not to adopt a 3.9 percent rate boost for workers’ compensation insurance.
The Maine Bureau of Insurance approved the rate increase Monday. It’s scheduled to go into effect April 1.
MEMIC, which controls 60 percent of the commercial market in Maine for workers’ comp insurance, will not raise its rates because it doesn’t want to burden the state’s already struggling business, according to a statement the company issued Thursday afternoon after its leadership team made the decision.
“This is the right thing for us to do at this time,” MEMIC CEO John Leonard said in the statement. “While we clearly understand that there is justification to raise rates, based upon increasing medical costs, MEMIC will hold the line on this increase at this time. We know that many Maine businesses are continuing to struggle in this economy and we don’t want workers’ compensation costs to impede economic growth here in Maine.”
Michael Bourque, MEMIC’s senior vice president of external affairs, told the Bangor Daily News on Tuesday that the recommended rate increase could cost Maine businesses and municipalities as much as $10 million. Given MEMIC’s share of the market, that would mean its approximately 18,000 policyholders in Maine could have expected to dish out as much as $6 million in higher premiums if the company adopted the rate increase.
Bourque also said most insurers adopt rate changes approved by the Maine Bureau of Insurance because those recommendations are backed by actuaries.
Reached on Thursday afternoon, Bourque said MEMIC’s decision is rare.
“I can’t remember the last time that a rate filing went forward that we didn’t adopt, and that the industry didn’t adopt,” he said.
“We know it’s unconventional for an insurance company to turn down a rate increase, but this is part of what makes MEMIC a special company,” Leonard said in the statement. “We’re an independent mutual company, based in Maine, and we’ve built an organization that is strong and able to make this choice on behalf of our policyholders.”
Since the company opened for business in January 1993, a result of the workers’ comp reform legislation the year before, it has grown its assets to nearly $900 million, according to its 2011 annual report.
“In our early years, I’m not sure we could have done this, but our experience over the years and strength of the company heading into our third decade allows us to do this,” Bourque said.
The recommended increase of 3.9 percent came after the Maine Workers’ Compensation Board in December updated its medical fee schedule, which determines how much health care providers receive for their services.