Wednesday, September 14, 2011
Oklahoma City– Oklahoma employers who are tired of paying some of the nation’s highest workers’ compensation insurance premiums finally have some hope for relief.
Insurance Commissioner John Doak announced today that the Oklahoma Insurance Department on Tuesday approved a filing by the National Council on Compensation Insurance reflecting a 1.7 percent decrease in the loss cost ratio used by many carriers to determine workers’ compensation insurance rates. The new loss cost data will be effective Jan. 1, 2012.
“An independent review of the filing is complete and the Oklahoma Insurance Department is pleased to approve NCCI’s loss cost filing of -1.7 percent,” Doak said. “Approval of this filing could lead to decreased workers’ compensation premium costs for many employers in Oklahoma.”
Madison Consulting Group Inc. performed the independent review of NCCI’s loss cost filing, determining that the -1.7 percent adjustment is reasonable based on available data and considering the likely effects of new Oklahoma workers’ compensation law.
Doak notes that each insurance company incorporates NCCI’s data in its own way, but generally loss cost data from NCCI is calculated along with other factors such as the policyholder’s prior loss experience to set the premium rate for the policy. Because the NCCI data goes into effect on Jan. 1, Oklahoma businesses could see workers’ compensation premium reductions beginning next year.
According to Oklahoma 21st Century, the research foundation affiliate of the State Chamber of Oklahoma, workers’ compensation premium costs in this state rose from ninth-highest nationally in 2008, to fourth-highest in the country by 2010. No surrounding state ranked worse than 12th on the 2010 list (Texas), while Kansas (43), Colorado (47) and Arkansas (49) have among the least expensive average costs for workers’ compensation policies in the United States.
Doak believes that cost discrepancy creates a competitive disadvantage for Oklahoma and closing the gap is crucial to growing Oklahoma’s economic base and employment numbers.
“This is good news for Oklahoma employers, Oklahoma’s economic developers and Oklahomans who want to see new jobs created in this state,” Doak continued. “For too long, high workers’ compensation costs have been a drag on the Oklahoma economy.”
Reforming Oklahoma’s workers’ compensation system was a top priority for Doak while campaigning for the office of Insurance Commissioner. Upon assuming office, he appointed Denise Engle – a highly experienced insurance and risk-management professional – as OID’s first-ever Deputy Commissioner of Workers’ Compensation Insurance, and selected Ellen Edwards, who served 12 years on the bench as an Oklahoma Workers’ Compensation Court judge, to be OID’s Deputy General Counsel.
“The experience they bring to the Oklahoma Insurance Department will help shape the future of workers’ compensation in Oklahoma,” Doak said.
NCCI and the independent review by Madison Consulting Group each attributed the 2011 reduction in NCCI’s loss cost filing to passage of Senate Bill 878 during the 2011 Oklahoma legislative session. Among its many reforms, the law promotes mediation rather than litigation of workers’ compensation disputes, sets a new Workers’ Compensation Medical Fee Schedule that is intended to reduce the cost of care by 5 percent, and gets injured workers back on the job faster by providing physical and vocational rehabilitation services.
Doak credited Gov. Fallin for her leadership on workers’ compensation reform, and commended the Legislature for its bipartisan support and passage of SB 878. The insurance commissioner hopes that spirit of cooperation will continue as further workers’ compensation reforms are sought.
“While SB 878 was a good first step toward long-term reform of Oklahoma’s workers’ compensation system, I believe that even greater efficiencies and better results could be achieved through a series of reforms that reduce systemic delays, more quickly rendering appropriate care to injured employees while expediting the process to reduce employer costs,” Doak said.
Doak’s future goals for workers’ compensation reform include:
Said Doak, “I believe Oklahoma can build upon this initial success and achieve lasting reform of the state’s workers’ compensation system, reform that benefits employers and employees alike.”
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About the Oklahoma Insurance Department
The Oklahoma Insurance Department, an agency of the State of Oklahoma, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state.
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For more information contact:
Glenn Craven
(405) 522-1769
e-mail: glenn.craven@oid.ok.gov