Some construction contractors have been faced with rising premiums to maintain adequate insurance on jobs they are handling. They say the premiums are making it challenging for them to run their businesses in New York State. Other contractors, particularly smaller ones in less populated regions of the state, are barking that the premiums are so high that they are unable to even afford the necessary coverage to get a job.
The increase in premiums comes at a time when New York construction is at its peak, with buildings, homes, schools and municipal projects being built at a dizzying pace. New York is the top state in the country when it comes to the amount of construction projects. It also happens to be the fifth safest. How can it be that insurance premiums continue to soar despite the staggering amount of work and the very favorable safety ranking?
One would think a low number of construction accidents should result in lower insurance costs. Yet, the insurance industry claims it is the result of the Scaffold Law, a worker safety law that you have read much about if you follow us. Still, the insurance industry is well aware that the law has been on the books for more than a century and the amount of recoveries under the law is largely stable. So why the surge in premiums?
It seems like a question that many contractors throughout the state, big and small, would be repeating over and over. Oddly, they have not but others have.
With the mounting costs and the uncertainty surrounding the reasons for those costs, New York State Assemblyman Francisco Moya and New York State Senator Andrew Lanza have sponsored a bill in Albany called the ‘Insurance Transparency Act.’ The proposed bill, which seems to be gathering momentum, would require insurance companies to open their books so the true impact of the scaffold law could be examined. Independent financial experts would be able to scrutinize the data and determine whether there is a real insurance crisis in the construction industry and what the cause of that crisis is. If there is in fact a crisis, the parties to this debate would be able to intelligently discuss a solution. Further, it would allow law makers to see real, hard numbers rather than base a decision dictated by rhetoric. One would hope our government doesn’t make a decision that will compromise worker safety based on the “wink, wink, nod, nod” of self-interested insurance companies. This seems to make a lot of sense.
In a recent Times Union opinion piece, the Northeast Region Vice President of the American Insurance Association, Gary Henning, sheepishly said the task of compiling the information was too challenging and that it would fail to provide any useful insight. Huh? The insurance industry has no problem compiling the information when it leads to them being able to justify increased premiums. Why is it too arduous a task for them now? If there is going to be an intelligent debate, everyone needs to lay their cards on the table and show their hands. The fact that they are opposing an open and honest debate is particularly revealing. The Times Union thought so: Scaffold Law opponents are all too quick to link New York’s high construction costs to the Scaffold Law . . . but is the law really the culprit? They concluded by saying” What this opague debate needs is hard data, which could help answer that question. Until it’s forthcoming, the legislature should leave the Scaffold Law intact.
The insurance industry wants a century old worker safety law to be changed. Workers and their families will undeniably be affected by the proposed changes. Lives will be lost or forever changed while accountability for worker safety will be dramatically reduced if the law is watered down. The proposed changes in the scaffold law, insurance industry honchos charge, are dictated by the increase in insurance premiums that insurance companies are compelled to charge due to the current law. The increased premiums are driven by data but, amazingly, insurance companies essentially take the position you will have to trust us on what the data shows. We don’t want to go through the trouble of producing the data. When has anyone placed blind faith in an insurance company and come away satisfied?
We will continue to follow how this discussion impacts the safety of workers throughout the state. Block O’Toole & Murphy is a law firm that fights for injured workers and works diligently to protect worker safety laws. You can learn more about these construction accident lawyers at www.blockotoole.com.