Insurers Seek to Keep Utah Workers’ Comp Fund from Selling Insurance in Idaho

A group of private insurers indicated they are supporting a move by the Idaho Department of Insurance to prohibit a subsidiary of the Utah Workers’ Compensation Fund (WCF) from selling insurance in Idaho and, they believe, undermining an already competitive market.

Filing a Petition to Intervene (Oct. 12) in support of the Idaho Department’s position were the National Association of Independent Insurers (NAII), Alliance of American Insurers, American International Group (AIG) and Liberty Northwest.

Advantage Workers Compensation Insurance Company, a subsidiary of the WCF, filed a Petition for Declaratory Rulings on September 24 that sought to overturn the recommendation of Idaho Department of Insurance staff that Advantage’s authority to sell insurance in Idaho be revoked based on the Department’s reading of Idaho Code Section 41-309.

That law prohibits any insurer, “the voting control or ownership of which is held in whole or in substantial part by any government or governmental agency, or which is operated for or by any such government or agency” from transacting insurance in Idaho. The Idaho Department’s answer (Oct. 4) to Advantage’s petition denied and disputed Advantage’s claims that it was not prohibited from transacting insurance in Idaho under Idaho Code Section 41-309.

“Benefits that Advantage enjoys due to its relationship with the state of Utah and/or the WCF would be unfair to other insurers and ultimately could squeeze them out of the market,” said Michael Harrold, NAII northwest regional manager. “The long term result would be to limit employers in Idaho to fewer choices for obtaining insurance, a consequence that the legislature recognized and sought to avert by enacting this law. Private companies should not have to compete with government-sponsored entities that have accumulated large surpluses due to their tax-free status.”

“Rather than increasing competition, allowing another state fund to operate in Idaho, in addition to the Idaho state fund that already is in existence, will be potentially very detrimental to the market,” said Nancy Schroeder, NAII assistant vice president, workers’ compensation. “The presence of a company backed by another state fund could destabilize the Idaho market because of its ability to engage in a very aggressive price war beyond the ability of most private insurers.

“It will create an environment where two state funds, backed by large surpluses, will be battling over the available Idaho market, with the real possibility that those private insurers who are currently attempting to provide an alternative market will be squeezed out,” Schroeder said. “Currently, both state funds are offering very large discounts and dividends, made possible by large surpluses that accumulated because of their status as state funds.”

Hearing Officer D. Duff McKee will hear oral arguments on the Petition to Intervene filed by the NAII, Alliance of American Insurers, AIG and Liberty Northwest, as well as any other interested parties, on Oct. 23.

Topics Carriers Workers' Compensation