Three State Senators are encouraging Oklahoma insurance regulators to approve the largest possible workers compensation rate cut when they meet later this month to conduct their annual review of the comp market.
In a letter addressed to members of the State Board for Property and Casualty Rates, Senators Johnnie Crutchfield, Dave Herbert and Keith Leftwich called for a "double digit" reduction, saying it would provide a big boost to area businesses, the Oklahoma economy and the state's overall business climate.
The state board is scheduled to meet on August 30th to conduct its annual rate review.
"The evidence suggests that Oklahoma businesses deserve a major rate cut - one that is measured in the double digits. We're just urging regulators to take a hard look at the evidence and do everything that they can to help our businesspeople," said Senator Crutchfield.
In their correspondence, the three lawmakers noted that all three actuaries involved in the comp rate case, even the official representing the insurance industry, have recommended a double-digit rate reduction.
For example, the State Attorney General's office, which represents consumers, wants a 13.7 percent rate cut while the National Council for Compensation Insurance, which represents the insurance industry, has suggested a 12.1 percent cut. The actuary for the property and casualty board is recommending a 13 percent cut.
"We would certainly prefer that the board err on the side of the consumer and give the biggest rate reduction possible. The closer to the high end, the better. Every percentage point reduction translates into millions of dollars in savings for Oklahoma businesses," said Senator Herbert.
In making their recommendations, the actuaries cited several positive trends in the workers comp marketplace. For example, according to NCCI, the frequency and severity of workers comp claims are at an all-time low in Oklahoma. In fact, both categories have declined steadily since 1993. The average indemnity cost per workers comp case also declined during that time period.
If state regulators follow the actuaries' recommendations, it will mark the sixth rate cut in the last seven years and result in perhaps the largest single-year rate reduction of the time period. Since 1997, rates have been reduced by almost 19 percent.
"A double-digit rate reduction would be great news, not just for the businesses that buy comp insurance, but for the entire state. The millions of dollars that businesspeople save will be reinvested in the Oklahoma economy and news of a double-digit rate cut will send a very positive signal about the state's overall business climate. Our economic development efforts will get a major boost from a rate cut," said Senator Leftwich.
The reductions were spurred in large part by a number of workers compensation reform packages approved by the Oklahoma Legislature. They have been credited with driving down costs through 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.
"We know our workers compensation system isn't perfect, but it has improved drastically over the past decade. We will continue to work to make it even better, but at the same time, we want to make sure that businesses get to enjoy the savings that previous reforms have generated," said the lawmakers.