Missouri senators are looking at changing a state-created insurance company after an audit criticized the firm’s operations and expenses.
State Auditor Tom Schweich called for the legislature to investigate whether the tax-exempt status of Missouri Employees Mutual Insurance Co. should be retained. A Senate committee has begun hearing testimony on a trio of proposals for the insurer.
MEM was created by state statute to provide Missouri employers, particularly small businesses, with a means to obtain workers’ compensation liability at a reasonable cost. The governor appointed the initial board of directors, after which the policyholders were to elect new directors.
Despite its tax-exempt status, MEM essentially operates as a private entity. MEM compensates its officers and employees at rates that are in excess of public-sector entities, incurs expenses that are not considered acceptable in the public-sector, and does not comply with state open records laws, the state auditor asserted.
One bill under consideration would require MEM to transfer $127 million to the state later this year as a step toward spinning off a new private company by 2013. Another bill would give MEM until 2014 to create a new private company but would not require it to pay the state. A third proposal would create a special Senate committee to study potential changes to the insurance firm.
Company CEO Jim Owen endorsed the study proposal. He says MEM has helped create a thriving, competitive marketplace for workers’ compensation insurance in Missouri.
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