Council requests 3.6% workers comp rate cut

Journal Record, The (Oklahoma City), Jun 29, 1998 by David Meuser Special to The Journal Record

Oklahoma businesses could get an early Christmas present this year in the form of a workers compensation rate reduction if a group representing the insurance industry has its way.

The National Council on Compensation Insurance Friday requested a 3.6 percent rate cut from the State Board for Property and Casualty Rates. The proposed reduction would go into effect Dec. 1.

If all goes according to schedule, the proposal would give employers their second rate cut this year. In January, the board ordered a 2.5 percent decrease. Peter G. Strauss, director of government, consumer and industry affairs for NCCI, said one of most important aspects of the filing is that it is based on calendar year 1997 information. The NCCI traditionally relies on much older information. "This is not mature enough to be completely validated," he said. But he said that given the changes in recent years in the Oklahoma workers compensation marketplace, the rating bureau wanted to use the more current data. Strauss said that while workers compensation reforms, such as those proposed by the Fallin Commission and ultimately adopted by the State Legislature, have been helpful in reducing rates, two other factors have also been important. First, Gov. Frank Keating has appointed the majority of Workers Compensation Court judges who have been more conservative in their awards than previous appointees. Strauss called rulings by the earlier court "interesting," saying that Oklahoma's law was a "pretty good" law but not interpreted well by the court. Second, the state's booming economy has reduced filings. Under the filing, not all employers would receive a cut in premiums. Employers in the office and clerical category would actually receive a 1.6 percent increase. Manufacturers would receive a 4.4 percent decrease and contractors would receive a 3.4 percent decrease. Employers in the goods and services sector would receive an overall 3.9 percent reduction. "Miscellaneous" employers would receive the largest reduction, 6.3 percent. While the NCCI has requested a 3.6 percent reduction, the members of the State Board for Property and Casualty Rates will have the final say. In fact, Insurance Commissioner John Crawford, who chairs the board, in announcing his bid for re-election, Wednesday said "plans are to order another 13 percent cut" this summer -- in addition to the 17 percent ordered over his four-year tenure. On Friday, Senate President Pro Tempore Stratton Taylor, D- Claremore, urged the State Board for Property and Casualty Rates to follow the State Insurance Fund Board of Directors, which approved a 5 percent reduction and voted to distribute a $12.5 million "dividend" to active policyholders. "I don't see any reason why the state property and casualty rate board shouldn't follow suit and deliver a rate cut to more Oklahoma business people," Taylor said. "If the market has improved for insurance fund customers, it should have improved for everyone. All businesses should be sharing in the savings generated by the reforms of recent years." The action by the state insurance fund marked the third such rate reduction in the past two years. The property and casualty board also has enacted three consecutive rate cuts but the reductions have not been as large. "It may be a situation where they have some catching up to do," the Senate leader said. "My concern is that some businesses may be paying more than is necessary, given the current market conditions. If that's the case, and it appears it may be, a rate cut needs to be delivered as soon as possible." The state insurance fund writes the insurance policies for approximately one-third of the Oklahoma business market, with the property and casualty board regulating insurance companies that write another third of the policies. The remaining businesses are self- insured. David Meuser is the editor of The Journal Record's Oklahoma Business News division.