Subject Number 046-957 Title ...
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Subject Number 046-957 Increase in the Aggregate Trust Fund Administrative Expense Multiplier

Board Bulletins and Subject Numbers

June 29, 2017

The administrative expense component of Aggregate Trust Fund (ATF) deposits for deposits first directed for calculation of the amount to be deposited into the AFT on or after July 1, 2017 is increased to 6% of the present value of the award, in order to cover 100% of the cost of claims handling, actuarial calculations, and investment management.

Background

Section 27(2) of the Workers’ Compensation Law requires private insurance carriers to deposit the present value of indemnity awards for death and permanent partial or total disability into the ATF. Insurers are also required to deposit “such additional sum as the board may deem necessary for a proportionate payment of expenses of administering such trust fund . . .[.]”

Increase in the Administrative Expense Multiplier for ATF Indemnity Deposits

Currently a 3% multiplier is applied to ATF indemnity award deposits to calculate the administrative expense component. The result is an additional sum that only covers approximately 50% of the State Insurance Fund’s costs. The administrative expense component of ATF deposits for deposits directed on or after July 1, 2017 is increased to 6% of the present value of the award, in order to cover 100% of the cost of claims handling, actuarial calculations, and investment management. The Actuarial Tables for Aggregate Trust Fund deposits contained in Special Bulletin 222C should, as of the effective date, use a 1.06 factor for the administrative expense multiplier in Examples 8, 10, and 11.

Kenneth J. Munnelly
Chair