The first "Rules for filing, stamping and Inspection of Compensation risks in the state of New Jersey" became effective on July 4, 1917 and consisted of two pages.  Ninety years later the Bureau Manual of rules and procedures consists of 216 pages and covers a broad array of matters, most of which were not conceived of in 1917.  And while the Bureau has since taken on additional responsibilities, it continues to effectively and efficiently perform the basic functions for which it was created; suggesting an enduring value of its purposes.  

The year 2006 has been a successful year for the Bureau.  The Commissioner's approval of a number of Bureau recommendations including the adoption of a Schedule Rating Plan and a cost differential in the Residual market, have made the market more competitive.  This has led to a market where carriers are writing more business in the voluntary market and are beginning to depopulate the Plan.  We believe the financial results for calendar year 2006 will move closer to a positive after several years of underwriting losses.  We also believe these changes, and others, have brought the New Jersey rating system more in line with the system in place in most of the other states.

The Bureau's ability to deliver services, its physical facilities, its staffing and its reputation with the business community, producers, labor and the public have never been better.  With the cooperation of the Department of Banking and Insurance, we have made good progress in addressing the issue of rate adequacy and residual market deficits.  In addition, we continue to make great strides in developing our ability to receive and send information electronically and our recent membership in ACCCT and CDX will make it even easier for carriers to comply with electronic filing requirements.

Each year we have updated our series of graphic presentations showing various important aspects of the cost of the New Jersey Workers Compensation system.  Of significance is the exhibit showing that rate increases over the past six years of 34.1% have been necessary to keep up with the automatic annual increase in the maximum weekly benefit of 37.6% over this same period of time.  Remarkably, even with these increases, the statewide average rate for all classes remains lower than that in effect in 1995.  Further, there appears to be a leveling out of the increases we have seen in recent years and both medical and indemnity payments and claim frequency continue to decline.

To a declining extent, the lingering effects of the September 11 attack, the following hard market and a spate of insolvencies in the early 2000s are still being felt.  While the residual market continues to be a home for too many risks, the number of risks has been declining slowly but steadily for two years.  Absent unseen events, we believe this trend will continue during the coming months.

The Compensation Rating and Inspection Bureau continues to function effectively and efficiently and will strive to serve the public as well as it has in its long history and will work to maintain a stable market for New Jersey employers, insurers and all those impacted by the system.

Respectfully Submitted

Grover E. Czech, Esq.

                                                                                                     Executive Director