View this article online: https://www.insurancejournal.com/news/west/2011/02/03/183219.htm
A Montana senator believes the state might save money if part of the workers’ compensation program were administered by a private insurance company.
Sen. Jim Keane urged members of the Senate Business, Labor, and Economic Affairs Committee to support Senate Bill 232. That bill would allow the state to accept bids for the management of the workers compensation “old fund.”
In 1990, the state split the fund into two groups as part of reorganization. There are still 898 open claims in the old fund, according to testimony by Nancy Butler, general counsel for the Montana State Fund.
Keane said the administrative costs are around $900,000 or around $1,000 per case.
“I think we can do it cheaper,” Keane told members of the committee. “How much cheaper? We won’t know until we bid it out.”
Representatives from three insurance companies spoke in favor of the bill. The organizations represented at the hearing were Victory Insurance Co., Property and Casualty Insurance Association of America and the American Insurance Association.
Speaking on behalf of Property and Casualty Insurance Association of America, Bruce Spencer told lawmakers, “My clients consistently want a more competitive environment.”
Butler spoke in opposition to the bill. She said the Montana State Fund’s opposition was because of technical details in the bill and not because of the concept. Butler said if those technical details were addressed the Montana State Fund would no longer oppose the bill.
In her testimony, Butler said the Montana State Fund would like to be allowed to enter a bid along with the insurance companies. Keane said he believed the Fund should be allowed to bid as well.
Butler said the “old fund” has around $5.6 million left and that total estimated liabilities are greater than $60 million. She said the fund is expected to run out of money around June of this year. Keane said after the money in the “old fund” is used the money would come from the state general fund.
After the hearing, Keane said currently around $8 million in claims go out every year.
“I just want to shine some light on this,” Keane told members of the committee. “What they’re bidding on is managing the old fund.”
Source: Montana Watchdog