Recommendation on Oklahoma’s CompSource Due Dec. 1

The Task Force on the Privatization of CompSource is charged with studying ways to privatize Oklahoma’s workers’ compensation agency, and its report is due to state legislators and Gov. Brad Henry by Dec. 1. Some of its members favor selling the agency or mutualizing it, but the Associated Press has reported that that the task force may recommend more study.

State statute sets Dec. 31, 2010, as the target date for privatization of CompSource, which was created in 1933 as the state’s workers’ compensation market of last resort. Linda Morgan, publications editor with CompSource Oklahoma, told Insurance Journal, however, that other bills may be filed in the next legislative session that may change the intent of the original statute.

Morgan said in early November that CompSource has not yet made a presentation to the panel but that it has been “working with the task force to provide information that they need. This is a process that has been ongoing since the last legislative session.”

CompSource, she says, strives to accomplish “what the legislature and state has charged us to do and we feel like we are a great benefit for those businesses that have need for coverage. A large portion of our policyholders are small businesses — mom and pop business — so we fit a particular niche.”

Rather than the residual market of last resort, Morgan said CompSource prefers to consider itself the “assured market” for workers’ compensation insurance. Required to “take all comers,” CompSource is available not only to private companies but state agencies as well. The company currently has around 25,000 policyholders representing about 35 percent of the market, Morgan said.

The task force has heard testimony from various parties, including insurance company representatives. Douglas Dirks, president and CEO of Employers, a mutual company formed a decade ago from what was the monopolistic workers’ compensation fund in Nevada, told the task force that the impact of mutualization in Nevada “was to clearly provide choice for the businesses in the state, just as they had choice on all other lines of commercial insurance,” because “not only did we privatize the company but we also opened up the market to competition.” Dirks told Insurance Journal that the move created “a very competitive marketplace and it’s resulted in downward pressure on rates.”

Lance LaGere, chief operating officer of Chandler, Okla.-based North American Insurance Company, told the panel the state could raise between $150 million and $200 million if it sold CompSource to the highest private bidder. LaGere said that a competitive bidding process for the agency should require bidders to buy CompSource’s assets and liabilities, according to AP reports.

Topics Workers' Compensation Oklahoma