Board to vote on big rate cut at next meeting

Journal Record, The (Oklahoma City), Aug 10, 2001 by Ray Carter The Journal Record

The State Board for Property and Casualty Rates will vote on a major reduction in workers compensation rates on Aug. 20, during the group's next regularly scheduled meeting.

Board members will consider a request from the National Council on Compensation Insurance for a 12.1 percent reduction in loss costs. Loss costs are the portion of overall rates related directly to worker injuries.

They are set on an industry-wide basis by the State Board for Property and Casualty Rates.

The NCCI represents workers compensation insurers doing business in Oklahoma.

During the board's Thursday meeting, members set Aug. 17 as the deadline for intervention applications relating to the proposed loss- costs reduction.

The board also voted to begin the Aug. 20 meeting at 8 a.m., rather than the normal 9:30 a.m. start time, so that the issue could be discussed and voted on in the morning. (Officials hope to have the hearing on the 12.1 percent reduction by 9 a.m.)

Insurance officials estimate the proposed cut would save Oklahoma employers about $25.6 million.

The reduction is based on a reduced number of workers compensation claims filed in recent years. Medical and lost-time costs have decreased by several percentage points in the last two years.

If approved by the State Board for Property and Casualty Rates, the loss-costs rate reduction could go into effect Dec. 1.

The Aug. 30 vote may be just the first round in a flurry of activity on the workers compensation front. Gov. Frank Keating has said the Legislature may consider reforms resulting in "double- digit" rate reductions during a special session this fall. That session is expected to occur in early September, but Keating has indicated that the special session may be delayed until October.

Keating has also indicated that workers compensation reform will not be considered until lawmakers have had time to study the tax reform issues already scheduled for the special session.

Negotiations concerning workers comp reform are ongoing between the governor and legislative leaders. Keating has argued that the current workers compensation system should be changed to encourage greater use of arbitration, which he said could result in substantial insurance savings for employers, based on estimates provided by the National Council on Compensation Insurance.

However, no agreement has been reached on workers comp reform and Keating has not added the issue to the special session call. During a special session, lawmakers may vote only on bills relating to subjects specified by the governor. So far, tax reform and congressional redistricting are the two major issues that will be addressed in the session.

The 12.1 percent loss cost decrease would follow the rollback of a loss-costs rate ordered by the State Board for Property and Casualty Rates last fall.

On Oct. 19, 2000, the board approved a 3.4 percent reduction mandated by the Legislature in the 2000 session. However, court challenges nullified the basis for that reduction, and the board was forced to repeal it last month.

A 2 percent loss-costs reduction approved by the board in September 2000 remains in effect.