All of West Virginia employers, other than governmental entities, on July 1 gained the advantage of being able to shop their workers’ compensation coverage among carriers in a competitive market.
Insurance Commissioner Jane L. Cline said all indications are that the privatization of the workers’ compensation market has been very successful. Employers are, in total, paying as much as 30 percent less than they did under the state monopolistic system and will now be able to choose their carrier based on their needs, according to Cline.
To date, 162 private carriers filed with the West Virginia Offices of the Insurance to offer their products to West Virginia employers. Of those 162 companies, 24 companies are new to the West Virginia insurance market.
Several aspects of West Virginia’s system were changed to reflect the systems found in most other non-monopolistic states, Cline said.
West Virginia installed the National Council on Compensation Insurance’s job classification system, which consists of over 550 classifications and is found in 37 other states. This enables businesses in the state to properly report the job functions of their employees and carriers to accurately assess the rate needs, Cline said.
The commissioner named NCCI as West Virginia’s statistical agent to determine appropriate loss cost rates for all classifications and develop applicable experience modifications for qualifying employers. Claims handling practices, policy issuance and billing procedures have been amended, among other processes, she said.
Recent legislation will allow West Virginia to establish a residual market using NCCI as the plan administrator, with reinsurance provided by the national pool. Again, this reflects systems commonly found in other states. Efforts to have the residual market ready by January 1, 2009, are currently underway and on schedule, according to Cline.
Meanwhile, BrickStreet Mutual Insurance Co., until recently the sole provider of workers’ compensation insurance in the state, said it plans to make an early $60 million payment on a $200 million startup loan from the state.
Greg Burton, BrickStreet president and chief executive officer, says the company wants to pay off its debt to the state ahead of schedule. Among other benefits, the early payoff would allow BrickStreet to avoid a higher interest rate going into effect next year and start paying its policyholders dividends sooner.
The Legislature created BrickStreet in 2006 and abolished the state Workers’ Compensation Commission.
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