Insurance rate methods mulled

Journal Record, The (Oklahoma City), Jun 4, 1999 by David Meuser Special to The Journal Record

A move by the state Legislature to study the way workers compensation insurance rates will be determined in the future in Oklahoma landed an insurance lobbyist in the hot seat Thursday at a meeting of the State Board for Property and Casualty Rates.

For at least 25 years, the state had one rating organization, the National Council on Compensation Insurance. A second organization, Insurance Data Resources, has applied to act as a competing organization.

Since insurance rates are based on the losses of an entire industry, in this case all workers compensation insurance written in Oklahoma, along with each individual company's administrative expenses minus investment income, several matters are to be discussed if more than one organization is to provide rates. IDR currently works in two states, Arizona and Florida, and the two have treated the matter differently. In Arizona, bids were taken from NCCI and IDR so that only one organization would provide statistical information but they would compete for the right. In Florida, the two work together sharing data. At issue Thursday was not a technical matter regarding the way two or more rating organizations would work in the same market. The problem is the board has been studying the issue for several months and Insurance Commissioner Carroll Fisher, who chairs the board, took exception to the way NCCI went about requesting a legislative study on the matter. House Resolution 1042 calling for the legislative study was introduced and adopted the day before the 1999 regular session was adjourned -- before Fisher was informed such a study had been requested. The resolution was requested by the NCCI. "The offense we have to the program is that they didn't discuss it with us," Fisher said. "I'm just really offended by it, that they would run a resolution like this." Fisher said he had not visited with the resolution's author or co- author. He said he plans to visit with Rep. Kevin Cox, D-Oklahoma City, who co-authored the measure with Rep. Jari Askins, D-Duncan. He said he doesn't even know if Cox is aware that the board has been conducting its own study. "This task force that they want to put together is going to cost lots of money," he said. Further, the department's study included professionals from around the country as opposed to a legislative panel which by the very makeup of the Legislature will be made up of lay people, or as Fisher put it, "the butcher, the baker, the candlestick maker." Larry Derryberry, Oklahoma City attorney representing NCCI, said that in retrospect the matter could have been handled better, but it was never his intention to mislead the commissioner or make him feel like he was trying to go around him. While apologizing, Derryberry pointed out the two had dinner, along with Peter Straus, NCCI's Oklahoma representative, not long before and at that meeting, Derryberry outlined concerns NCCI had with the current process. Fisher pointed out that most of the discussion at the dinner concerned the way NCCI and IDR had been able to work together. "It was never intended to be sneaky or we would never (met) with you," Derryberry said. Derryberry said he represents several organizations before other agencies and has never felt the need to go through the agency to the Legislature. Fisher said that organizations may even disagree with his position on a matter and are free to go to the Legislature. But, he said he would like to be informed. "I'm just trying to get the industry to know that the insurance department wants to be a player," Fisher said. John Marshall, board member, told Derryberry he thought the organization made a "strategic error" in its handling of the matter. "What looks like an end run was not an end run," Marshall said. "It was a forward pass or something like that." Derryberry offered to go to the resolution's author and ask her to disregard the resolution, or go to House Speaker Loyd Benson, D- Frederick, and ask that the study not be held. But Steve McCaleb, board attorney who has been heading the study, said such a study could prove beneficial. "I think we can take this and make a huge positive and work with the Legislature in harmony," he said. He said the task force may determine that statutory changes are needed. Derryberry said having a task force study possible statutory changes now, rather than during the first few weeks of the 2000 session, would put the matter more on the front burner. David Meuser is the editor of The Journal Record's Oklahoma Business News division.