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ADJUSTMENTS OF CLAIMS UNDER THE ACT. After a very careful comparative study of the operation of compensation laws in other States, it is reasonable to assert that Massachusetts stands pre-eminent in the following respects : first, in the automatic settlement of compensation agreements between the insurance companies and injured workmen, which, if in accord with law, are approved by the Industrial Accident Board; second, in the lack of formality at the hearings held by arbitration committees and by the Industrial Accident Board; third, in the rapidity with which appeals to the Supreme Judicial Court have been heard. This pre-eminence, however, is due partially to the fact that our wage earners, as compared with those of the western States, are concentrated in what is relatively a small area, and it is possible, therefore, for the Industrial Accident Board to give immediate attention to all matters of dispute brought to its notice. In many of the western States, where there are large areas to be covered, and where there is a lack of transportation facilities, the celerity shown in the adjudication of disputes in Massachusetts would not be possible.

Even conceding these physical advantages of Massachusetts, nevertheless the satisfactory result shown is largely due to the method of administration. The National Civic Federation, in its recent report, based on an examination of the whole field of workmen's compensation administration, is strongly of the opinion that the Industrial Accident Board method is the logical plan of enforcing this law.

The resultant advantages of this method of administration are many. The Board has been able to brush aside the formality which previously embarrassed and delayed the workman in the presentation and settlement of his claims for injuries, and to arrive at prompt and usually satisfactory judgment in each case. There has been created a better feeling of harmony between employers and employees. Employers generally show interest in having claims for injuries paid promptly, and in some cases employers, foremen and superintendents are chosen by injured employees as their representatives on committees of arbitration. This attitude helps to advance the cause of industrial

peace. . The following table shows the number of requests for arbitration and their disposition:

584 349

182 53

Total number of requests for arbitration from July 1, 1912, to

Nov. 30, 1913, inclusive,
Total number of cases heard by committees of arbitration, .
Total number of cases in which arbitration was requested, which

were settled without a formal hearing,
Total number of cases pending,
Total number of cases heard by the board on review under sec-

tion 7, Part III., Total number of cases heard by the board on review under sec

tion 12, Part III., Total number of cases appealed to the Supreme Judicial Court, About 3,000 claims, regarding which there was some dispute, were

adjusted by the mediation of members of the Board, by conference with employees and insurers.

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INSURANCE BENEFITS UNDER THE ACT. Comparing the results of the workmen's compensation law, so far as the benefits to injured employees are concerned, with the former indemnity liability law, the report of the Insurance Commissioner for the year 1912 shows that there was collected in liability insurance premiums in 1911 $3,360,558.52. These premium payments included the cost of employers' liability and public liability. This report also shows that there was paid out in losses in 1911 for both these classes of liability $1,412,579.

It is generally estimated that the loss payments on employers' liability were about equal to those on public liability, and that the average cost to the injured person of collecting a loss under either head was not less than 50 per cent. of the

gross

amount received.

On this basis, the net payments to wage earners under employers' liability in Massachusetts for the year 1911 amounted to less than $400,000.

Reports from all the insurance companies doing business in Massachusetts under the Workmen's Compensation Act show, for the year ending June 30, 1913, a total expenditure of $1,677,380.82. This amount covers the liability for compensation to dependents and widows, and continued payments for total and partial disability, but does not include insurance administration costs, commissions, profits, dividends, etc.

The amount paid by employers in Massachusetts for premiums under the Workmen's Compensation Act is not yet available, but a minimum estimate of the premium insurance cost under workmen's compensation for the period July 1, 1912, to June 30, 1913, is set at an average rate of 1.2 per cent, of the pay roll. In computing this figure due allowance is made for error and for the reductions in rates made by the insurance companies. To arrive at the actual cost of the insurance to the employers of Massachusetts, which is not otherwise obtainable except by estimate, it is found that the total pay roll of the 608,590 persons employed in manufacturing industries alone was $335,553,704, or an average wage of $551.36 a year.

Assuming that the 191,410 additional wage earners estimated to be engaged in trade, transportation, etc., who are not specifically recorded by the Bureau of Statistics, receive the same annual wage as that shown for those employed in manufacturing (although it is likely that the persons engaged in these occupations would have wages in excess of those in manufacturing), the total pay roll of the Commonwealth for wage earners subject to the act would be $441,089,521.60. · On the estimated number of employees covered by the act, as shown by the accident reports, and allowing a reasonable margin for error, the premium income of the insurance companies under the act for the first twelve months of the Workmen's Compensation Act would be not less than $4,000,000, and this, taking into consideration all reductions of premium rates made since July 1, 1912, when the act went into effect.

On the basis of the insurance companies' own figures, $1,677,380.82 was paid out in actual losses, exclusive of insurance cost, under the act. The estimated losses paid to wage earners engaged in manufacturing alone would be $1,575,060.

According to the last report of the Bureau of Statistics, the value of the manufactured products in Massachusetts for one year was $1,596,734,445.

The actual cost of losses under the Workmen's Compensation Act, to be charged against the finished product of Massachusetts manufactures, was $.0009 for each dollar of product. This is exclusive of the administration cost of insurance. In other words, the consumer paid for every $10 unit of purchased product less than 1 cent as the per capita cost for the actual losses paid under the Workmen's Compensation Act.

After the payment of the compensation due under the act, and setting apart the necessary reserves with which to meet future

payments due for injuries causing incapacity and fatalities necessitating weekly payments to dependents beyond the period covered by this report, insurance companies had a margin of more than $2,000,000 with which to pay for the cost of administration and profits during the year. This shows that

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for every dollar received by the insurance companies for premiums under the Workmen's Compensation Act less than 45 cents was paid out in losses, and more than 55 cents retained to pay for the cost of doing business and the payment of dividends to stockholders. Stock insurance companies generally claim. that they must have from 50 to 60 cents on the dollar of premium in order to transact business, and the difference between the payments made and future liability on account of injuries occurring during the first year's administration of the law, and the premiums collected, indicates that insurance companies have retained that proportion of the premiums. No allowance has been made on account of the dividends which mutual companies have paid to their subscribers, the Board having no means of obtaining information with respect to these dividends, except that it is generally known that dividends of about 25 per cent. of premiums, and upwards, have been returned to mutual company subscribers. This refund is in addition to the reductions in rates which have been made by stock and mutual companies alike.

It should be said at this point, and it will be brought more clearly to view in another chapter of the report, that if the experience elsewhere is to be followed in Massachusetts, as is most likely, the loss charge of insurance will be higher the second and third year after the introduction of the act than it has been the first. Even if no legislative additions are made which will add to the cost of insurance, it is probable that the cost will be 20 per cent, more next year than it was during the year from July 1, 1912, to June 30, 1913.

Emphasis should be placed on the point that the rates of insurance companies should not be fixed merely by guesswork, as they apparently have been in the past. While economy of administration should be provided for, no rate should be allowed in any hazardous class to become so low as to permit the business to result in an excess of charge to employers paying premiums on classes of business not of such great hazard, because this tends to discredit the law in the minds of emplovers who are unequally burdened.

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