A state-created insurance company for workers’ compensation coverage is expecting to lose million of dollars in government agency contracts when the market opens up to other carriers next week, the insurer’s chief said.
One by one, boards of education and other entities across the state are deciding on where to renew their coverage and in many cases are switching to carriers with lower rates. Greg Burton, president and CEO of BrickStreet Mutual Insurance Co., said that’s to be expected.
State lawmakers created BrickStreet in 2006 in a move to privatize the state’s workers’ compensation program. The company is the sole provider of such insurance for government agencies until July 1, when the market will open to competition.
The market was opened to private insurer competition over BrickStreet’s private clients two years ago.
Government agencies account for about $50 million in premiums BrickStreet Mutual insurance Co. writes annually. State agencies account for $18.5 million in steady business, meaning the other $31.5 million is “out in the marketplace being priced,” Burton said.
Burton estimates about $8 million in government business could be lost, but BrickStreet won’t know until after individual agencies make their decisions.
“From our standpoint, it’s no different than when the market opened up for the private sector in July 2008,” Burton said. “BrickStreet will price accordingly. We will not chase premiums just to retain premiums if we can’t do it profitably.”
BrickStreet’s premium rates had been the same for all government agencies, but no longer. Burton said for every $1 that BrickStreet collected in premiums, the company spent $1.40 to cover losses and expenses. Thus, rates have gone up.
This week, more bricks fell.
Boards of education in Hancock and Randolph counties voted to drop BrickStreet because other carriers’ bids were lower.
Charleston’s Yeager Airport did the same thing, following similar announcements by Kanawha County’s commission and board of education and the city of Dunbar.
“It was strictly a business decision. The Legislature opened up the public sector market for competition this year, and we took advantage of that to seek proposals and we received several and we went with the low bidder,” said Bill Courtney, director of employee relations for Kanawha County schools. “It was a cost-saving measure.”
Switching to Travelers Companies Inc. will save more than $200,000, Courtney said. The premium will drop to approximately $1.5 million.
“If they can get something cheaper, we encourage them to take that and we’ll continue to move forward and look at trying to retain as much business as we can,” Burton said.
BrickStreet had announced significant premium increases effective on July 1 for volunteer fire departments statewide. But earlier this month, Gov. Joe Manchin announced the increases were being postponed for a year while lawmakers addressed firefighter safety and liability issues.
Many volunteer fire departments had indicated they couldn’t afford the increases and would have to shut down or cut back services.
BrickStreet had planned to change the way it calculates premiums, based on a firefighter’s average wage instead of a volunteer’s regular job. Burton said Brickstreet now will cover volunteer fire departments at the current rates until July 1, 2011.
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