News Currents

October 9, 2006

Alaska workers’ comp reforms helping to lower rates

Alaska Gov. Frank H. Murkowski has announced he is pleased that workers’ compensation system reforms proposed by the administration and enacted last year by the Legislature have led to a proposed 10.5 percent reduction in workers’ compensation insurance rates for 2007.

“When we took office four years ago, workers’ compensation rates were second highest in the nation, second only to California,” Murkowski said. “With the reforms we achieved last year, we are now looking at an average reduction in those rates of 10.5 percent. After years of suffering through ever escalating rates, Alaska’s employers can now look back and see that the effort was worthwhile. Lower rates will translate into more viable Alaska businesses that will be able to hire more workers.”

Murkowski made workers’ compensation reform a top priority two years ago and introduced legislation in the 2004 regular legislative session. The bill was finally passed in a special legislative session in 2005.

The proposed reduction is the first overall decrease in workers’ compensation insurance rates since 1999.

Linda Hall, director of the division of insurance in the Department of Commerce, Community and Economic Development, held a public hearing in late September on the proposed rate reduction. Based on comments from the hearing and the division’s review of the proposed decrease, the amount of the proposed rate change is subject to revision and will likely be officially set in late October.

Hall noted that the reduction in proposed rates results from a combination of the legislative changes that lowered the cost of medical expenses and to improvements in worker safety.

“Under the governor’s leadership, we have been able to bring the Legislature, employers, workers and other stakeholders to the table to achieve this reduction,” Hall said. “Although the interests have been diverse, in the end, the stakeholders know that it’s in everyone’s interest to bring rates down.”

Hall said medical costs per claim are approximately twice the rate in 1997. The workers’ compensation reform legislation in 2005 began to address this issue by freezing medical rates at 2004 levels for 18 months. Worker safety also has improved since 2000, with accident frequency decreasing by approximately 37 percent.

Murkowski said the reforms – and the resulting lower rates – could not have been achieved without the strong support and determination of the business community and the legislative leadership of the Republican majorities.

“Fixing failed policies is never easy and the debate over Senate Bill 130 was no exception,” Murkowski said. “Although some criticized the debate as too contentious, it was a healthy and thorough discussion that brought to light the differences between the Democratic minorities’ holding on to failed policies, on the one hand, and the administration’s and Republican majorities’ willingness to tackle the reforms needed to move Alaska forward.”

“Taking on the tough issues is what the people expect us to do,” Murkowski said. “Long and contentious debate? That’s what it takes to change the ‘that’s how we’ve always done it’ attitude and enact healthy reforms. It’s great to see those efforts produce the desired results.”

With the exception of Representative Carl Moses, the support came mostly from the majorities in the Legislature.

“I would especially like to extend my thanks, once again, to Senator Ralph Seekins and Representative Norman Rokeburg, both of whom worked tirelessly on the workers’ compensation reform bill,” Murkowski said. “We also got strong support from the business and medical communities, both of which will reap rewards from a reinvigorated workers’ compensation system,” he noted.

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