Rhode Island Beacon Mutual’s looks to write next chapter

Beacon Mutual remains a non-profit. Beacon remains Rhode Island based. Beacon remains focused exclusively on workers’ compensation.

Nearly 15 years ago, Rhode Island employers faced an uncertain future: state law required businesses to carry workers’ compensation insurance to cover their employees, yet no commercial insurer would write such insurance in Rhode Island. Businesses and their jobs were leaving our state as a result of our dysfunctional workers’ compensation system. The state, to its credit, responded by organizing and chartering a non-profit, state-regulated mutual insurance company owned by its policyholders that focused exclusively on workers’ compensation insurance – The Beacon Mutual Insurance Company.

Model insurer

Today, Beacon is a model for the nation: an efficient, well-managed insurance company which, in an era when employers associate most forms of insurance with double-digit increases, is actually reducing premiums and returning value to policyholders.

While we are proud of this accomplishment, there is more that we can do to help Rhode Island employers. Many of our policyholders are so satisfied with the coverage and the service they receive from Beacon that they have asked us to provide coverage for their employees who work in locations outside of the state. Other Beacon policyholders, most of them small businesses, have sought safety discounts. This is a common industry practice of rewarding employers who have taken measures or adopted policies that promote a safe and healthy workplace.

Good and bad news

First, the bad news: without changes in current law, Beacon will be unable to help these Rhode Island companies that want and deserve to enjoy the same value and high level of service for both their in-state and out-of-state business.

Next, the good news: the Greater Providence Chamber of Commerce, the Central Rhode Island Chamber, the Northern Rhode Island Chamber, the Newport Chamber, the National Federation of Independent Businesses and the Independent Insurance Agents of Rhode Island have joined forces with Beacon, as well as with labor groups, in support of legislation to bring about these much-needed changes, while guaranteeing that Beacon remain non-profit, Rhode Island based, and focused exclusively on what it does best: workers’ compensation insurance.

Essentially, the proposed legislation makes two improvements to Beacon’s Charter: one to corporate governance and one to corporate pricing practices.

Public appointments

Presently, the Governor appoints a majority of our board of directors. We seek changes that would still allow for public appointments to the board – three as opposed to five – but would allow private-sector businesspeople, representing policyholders, be elected to the remaining board positions. This change would allow Beacon to provide less costly, more efficient coverage for out of state employees who work for Rhode Island-based companies, something that we are prohibited from doing now in more than 20 states since the board is “government-controlled.” We believe this change allows for the best of all worlds – continued strong public oversight, and responsive service to policyholders.

This legislation also allows Beacon to give safety discounts to small businesses that take measures to ensure worker safety. Right now, businesses with premiums of less than $5,000, regardless of their injury track record or commitment to a safe workplace, cannot be rewarded for their good experience.

Remaining non-profit and R.I.-based

Also noteworthy, particularly in light of changes made to the legislation since it was first proposed, is all that does NOT change about Beacon under this bill. Beacon remains a non-profit. Beacon remains Rhode Island based. Beacon remains focused exclusively on workers’ compensation, exclusively for Rhode Island companies. Beacon remains committed to providing the best services at the lowest possible price.

In a day and age of increased scrutiny paid to corporate governance and accountability, both locally and nationally, Beacon Mutual stands as an example of solid, ethical business practice, strong governance and accountability, and a commitment to customers. For example, we are members of the National Association of Corporate Directors and on their advice adopted and adhere to Sarbanes-Oxley principles even though they are not required. We have engaged Dennis Michaud, a professor at Brown University and leading expert in corporate governance, in reviewing our structure, practices, and proposals for modernizing our governance structure.

This legislation is good for Rhode Island businesses, the economic welfare of our state and the continued stability of our workers’ compensation system. We welcome discussion on the proposed legislation, on Beacon Mutual, and on our quest to better serve the thousands of businesses who are looking to us for fair and affordable coverage for their more than 400,000 total employees.

Joseph A. Solomon is president and chief executive officer of Beacon Mutual Insurance Company. He can be reached at jsolomon@beaconmutual.com.

Topics Legislation Workers' Compensation