AIA Cautions Mont. From Privatizing State Fund

July 12, 2002

The Montana State Legislature should be skeptical of the Montana Workers’ Compensation State Fund’s (State Fund) proposal to privatize when lawmakers return for their Aug. 5 special session, according to the American Insurance Association (AIA).

“The State Fund’s reorganization proposal could put private carriers at a competitive disadvantage and hurt Montana’s marketplace,” Bill Gausewitz, AIA assistant vice president, western region, remarked. “The State Fund has not demonstrated why this is an emergency. The Legislature is only going into session for two weeks. That is not nearly enough time to analyze and debate such a complicated public policy matter.”

Gov. Judy Martz (R) has called the Montana Legislature into a special session Aug. 5-16 to handle the state’s $45 million budget gap. Martz has proposed the State Fund payback $16.5 million over the next three years as interest on a previous General Fund loan. When the special session was called, the State Fund announced they would seek passage of legislation to become a self-supporting, nonprofit, independent, public corporation.

“The State Fund apparently wants to have it all,” Gausewitz said. “This proposal allows them to operate as a private carrier without the burden of state and federal taxes to which all other insurers are subject. We do not oppose the State Fund’s efforts to privatize, but we do object to the unfair playing field their proposal creates. The legislature should slowly and critically examine the real impact of this complex, 93-page bill.”

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