NY Workers’ Comp Rates Drop 21.9%: 3 Real Examples of How Much You Could Save
Effective October 1, 2026, New York State’s overall average workers’ compensation loss costs decreased by 21.9%. The state estimates the change will save businesses more than $1 billion a year, or about $1,779 per policyholder on average.
This is New York’s tenth consecutive annual decrease and the largest in recent years. However, 21.9% is a statewide average. How much your business actually saves will depend on your industry, payroll, claims history, and insurance carrier. Below, we walk through three real examples to explain how premiums are calculated, how much you could save, and what to review before your policy renews.
What Is Workers’ Compensation Insurance, and Which Businesses Need It?
Workers’ compensation insurance pays for medical treatment and a portion of lost wages when an employee is hurt or gets sick because of their job. In New York, nearly every business with employees, including part-time workers, is required to carry this coverage. Only a few cases are exempt, such as sole proprietors with no employees.
It provides two key protections:
For employees: It covers medical expenses for work-related injuries and pays partial wage replacement while they are unable to work. If an employee dies from a work-related injury, their family may receive death benefits.
For employers: Employees who receive workers’ compensation benefits generally cannot sue their employer over the same injury, which protects the business from costly lawsuits.
Businesses that fail to carry required coverage may face substantial fines from the New York State Workers’ Compensation Board, and if an employee is injured, the business may have to pay the full cost of the claim out of pocket. For New York business owners, workers’ compensation is not optional. It is a required, recurring cost of doing business, which is why this rate decrease matters to every employer.
Background and Timeline of the Rate Change
This change was filed by the New York Compensation Insurance Rating Board (NYCIRB) and approved by the New York State Department of Financial Services (DFS). It applies to policies effective on or after October 1, 2026.
Date | Milestone |
October 1, 2026 | New rates took effect for new and renewal policies effective on or after this date. |
July 15, 2026 | DFS approved the filing; the Governor’s office announced projected savings of more than $1 billion for businesses. |
May 15, 2026 | NYCIRB formally submitted the filing to DFS. |
May 7, 2026 | NYCIRB's governing board voted to seek a 21.9% reduction in overall loss costs. |
This is the tenth consecutive year New York has lowered workers’ compensation loss costs, following a 13.2% decrease in 2025. Officials attributed the reduction mainly to a continued decline in workplace injuries and several recent reforms to the workers’ compensation system. These include allowing more qualified health care providers to treat injured workers directly and allowing medical treatment to be paid while a claim is under review, which has reduced delays and added costs.
New York State has also lowered the state assessment rate that employers pay, to 7.0% of standard premium in 2026. In addition, the New York State Insurance Fund (NYSIF) returned more than $700 million in dividends and discounts to its policyholders over the past year.
What Are Loss Costs? How Do They Affect Your Premium?
Loss costs can be thought of as the “base cost” of workers’ compensation insurance. This decrease applies to loss costs, not directly to each business’s premium.
Loss costs represent the expected cost of workplace injury claims, including medical care, lost-wage benefits, and claims handling expenses, for every $100 of payroll. NYCIRB calculates loss costs separately for hundreds of industry classifications (class codes), and each class code has its own loss cost.
Insurance carriers multiply NYCIRB’s loss costs by their own loss cost multiplier (LCM), which accounts for operating expenses and profit, to set the rates they charge. Each carrier’s LCM must be approved by DFS, but LCMs vary from carrier to carrier.
How your premium is calculated:
Rate = Loss cost for your class code × Carrier’s LCM
Base premium = (Payroll ÷ 100) × Rate, calculated separately for each class code and then added together
Experience modification: Eligible businesses receive an experience modification factor based on their claims history. Fewer claims may earn a credit; more claims may result in a surcharge.
Final premium: State assessments and other charges are added to arrive at the total premium.
Keep in mind that workers’ compensation policies are usually audited after the policy period ends. Your premium is then adjusted based on actual payroll, which may result in a refund or an additional bill. That is why accurate employee classifications and payroll reporting have a direct impact on what you ultimately pay.
How Much Could the Rate Decrease Save You?
State officials estimate the average policyholder will save about $1,779 a year.
For a rough estimate of your own savings, multiply your current annual premium by 21.9%. The table below is for illustration only, based on the statewide average decrease rather than official figures.
Current Annual Premium | Estimated Annual Savings (21.9%) |
$5,000 | $1,095 |
$10,000 | $2,190 |
$20,000 | $4,380 |
$50,000 | $10,950 |
Three Real Examples: A Restaurant, a Bakery, and a Nail Salon.
Estimates only go so far. Actual savings depend on each policy. Below is a comparison of premiums before and after the new rates for three small businesses in New York (client details have been removed):
Business | Annual Payroll | Premium Before | Premium After | Annual Savings | Decrease |
Nail salon | $141,153 | $1,097 | $739 | $358 | 32.6% |
Bakery (with baking staff) | $51,500 | $2,818 | $2,112 | $706 | 25.1% |
Restaurant | $330,000 | $4,242 | $3,493 | $749 | 17.7% |
Under the same rate decrease, actual savings for these three businesses ranged from 17.7% to 32.6%.
It is also worth noting that premiums are not driven by payroll alone. The nail salon’s payroll is nearly three times the bakery’s, yet its premium is only about one-third as much. This is mainly because the two businesses fall under class codes with very different rates. In other words, which class code your employees are assigned to, and whether that classification is correct, can affect your premium more than total payroll.
Key Items to Review Before Your Policy Renews
A rate decrease is a good time to review your policy. Many businesses overpay not because rates are high, but because employees are misclassified or payroll is reported inaccurately.
Are your employees in the right class codes? Rates for office clerical staff and field construction workers can differ several-fold. If clerical employees are placed in a higher-risk class, you will overpay every year.
Is your payroll reported accurately? Report actual payroll, and make sure you understand how New York treats items such as overtime pay. This helps you avoid an additional bill, or overpaying, at audit.
Do your subcontractors carry their own workers’ comp? If a subcontractor is uninsured, their payroll may be added to your premium at audit. Request a current Certificate of Insurance (COI) from each subcontractor every year.
How much did your renewal quote go down? Compare it with the estimate table above. If your premium did not decrease, ask your broker why.
Have you compared quotes from other carriers? Each carrier uses a different LCM, so getting quotes from one or two others can often save you money.
Are you eligible for any discounts? Some businesses can qualify for premium credits by participating in a state-certified safety program or joining an industry safety group.
Frequently Asked Questions
My policy renewed in March. Will I see the lower rates now? Usually not. The new rates apply to policies effective on or after October 1, 2026, so most businesses will see the change at their next renewal.
Do I need to request the lower rates? No. Your carrier will quote your renewal using the new rates. However, review your renewal quote carefully to make sure your class codes and payroll are accurate.
My renewal quote went up. Is that normal? It can happen. If your headcount or payroll increased, or you had recent claims, your premium may rise rather than fall. Ask your broker to walk you through the quote line by line to see what changed.
Can I switch carriers mid-term? Yes, but make sure the new policy starts the same day the old one ends, with no gap in coverage. A lapse can result in penalties from the Workers’ Compensation Board.
Do I need coverage if I only have two or three employees? In most cases, yes. In New York, businesses with employees, including part-time workers, are generally required to carry workers’ compensation. To find out whether you qualify for an exemption, talk to your broker or contact the New York State Workers’ Compensation Board.
Summarize
For New York business owners, this rate decrease is good news. However, how much each business actually saves will depend on its specific policy. Before you renew, use the checklist above to confirm that your employee classifications and payroll are accurate, and compare quotes from several carriers to make sure you are getting the full benefit of the lower rates.
J&Z Insurance Brokerage, located in Great Neck, Long Island, works with more than 40 A-rated carriers to provide commercial insurance for business owners throughout the New York area. If you have questions about your workers’ compensation policy or want to know how much you could save this year, contact us. We offer free policy reviews and quotes to help you understand your current coverage and compare options from multiple carriers.
Telephone : 929-200-7152
Address : 73 Cuttermill Road, Great Neck, NY 11021
WeChat : 9292007152
This article is for general informational purposes only and does not constitute legal or insurance advice. All estimates are for illustration only; actual premiums are determined by each carrier's quote.
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