A group of state legislators is renewing its call for a cut in workers compensation insurance rates, this time citing a rate decrease request filed by a group representing insurance companies which offer workers comp policies in Oklahoma.
"When the people who are making money writing the workers comp policies request a decrease, you know a rate cut is in order," said Senator Jim Maddox, chairman of the Senate Small Business Committee. "The question now is not whether a rate cut should be implemented, but how large that rate cut should be."
Senator Maddox and a group of Senators formally requested a rate cut two weeks ago. This week, the National Council on Compensation Insurance, the group that represents workers comp insurance carriers, officially requested a 3.4 percent decrease.
Last year, NCCI requested a slight increase in rates, but the State Board for Property and Casualty Rates ultimately implemented a rate cut at the urging of an independent actuary who also cited reforms approved by the Legislature. NCCI's requested increase last year was 1.2 percent; the decrease approved by the board was 4.5 percent, almost a 6 point difference.
"If you use history as a guide, I'd say our businesses are in line for at least a 10 percent cut, maybe more. It all depends what the independent actuary recommends," said Senator Maddox.
The independent actuary is expected to recommend an even larger decrease in the final report he submits to Insurance Commissioner John Crawford and the casualty board. Citing the NCCI request this week, Crawford also predicted a decrease in rates.
"I'm glad to have Commissioner Crawford on board. I think all elected officials should join the Senate in calling for a rate reduction. It's the best thing we can do to help Oklahoma businesses," said Senator Maddox.
In his report last year, the independent actuary also predicted a series of future rate decreases, reasoning that the workers comp marketplace would improve as legislative reforms gradually took effect.
When Senator Maddox and others officially called for another rate cut last month, they cited a new Senate analysis on the effectiveness of the 30 workers compensation reforms approved by the Legislature in the last four years.
Among the findings:
- Citing legislative reforms earlier this year, an independent actuary recommended a workers comp reduction of as high as 14%, but only a 4.5% reduction was implemented by the State Board on Property and Casualty Rates;
- Workers comp filings have decreased by 8% since a reform package was passed in a 1994 special session. That program included stiffer fraud penalties, workplace safety initiatives and dueling doctor reforms;
- Fraud charges have increased by 37% in the last year with 92% of the cases ending in guilty pleas;
- The use of the Independent Medical Examiner has increased by 42% from 1994;
- More than 40,000 workers are currently enrolled in workplace medical plans designed to contain premium costs.
Even though decisions by the Board for Property and Casualty Rates are not binding on the State Insurance Fund, the insurer for a large number of small businesses in Oklahoma or self-insured carriers, Senator Maddox is hoping they will follow recent trends and reduce rates as well.
"I'd like to see an across-the-board reduction in workers comp rates, not just for one class of businesses, but for all businesses," he said.
Some of the reforms enacted in recent years include the increased use of independent medical examiners, restrictions on attorney fees, tougher fraud enforcement, job safety programs and the introduction of medical cost containment and managed care.