News Currents

Beacon Mutual bill advances over R.I. Gov. Carcieri’s opposition

Rhode Island Gov. Donald Carcieri lost the first round in this year’s battle to restructure the state’s dominant workers’ compensation writer, Beacon Mutual.

Over Carcieri’s objections, the Rhode Island Senate on a vote of 34-3 passed legislation to reduce the number of public appointees to the board and free the insurer to cover out-of-state employees of its in-state accounts.

The measure would also give Beacon Mutual more freedom to set its own rates and offer safety discounts to more businesses.

The legislation now goes to the House for consideration.

Similar legislation passed both houses last year but was never forwarded to Carcieri, who opposed it then and still does. The governor argues that the bill is bad policy because it diminishes public oversight of the state’s near-monopolistic workers’ compensation carrier.

Senate lawmakers and the business community see the bill as improving the market. “Beacon has joined forces with the business community to improve the coverage we provide to Rhode Island employers,” said Joseph A. Solomon, president and chief executive officer of Beacon.

“This is a landmark piece of legislation that is supported by the entire business community,” said the bill’s sponsor, Sen. Roger R. Badeau (D- Dist. 20, Cumberland, Woonsocket).

The insurer for 90 percent of Rhode Island’s employers, Beacon Mutual is currently governed by a seven-member board of directors; five of them are appointed by the governor. Badeau’s bill calls for a board of directors with one member appointed by the governor, one by the President of the Senate and one by the Speaker of the House. According to Beacon Mutual, the current rule of a majority of publicly appointed members keeps it from being able to write in states that prohibit entry by insurers that are “government controlled.”

But Carcieri and the Rhode Island Department of Business Regulation are fighting the move to lessen the government’s control over the board. Carcieri’s deputy chief of staff, Jeffrey Grybowski, contrasted the General Assembly’s efforts to reduce public oversight of Beacon Mutual with the decision to increase oversight of Blue Cross/Blue Shield of Rhode Island in the wake of scandals involving its governance last year. “In this context, why weaken the corporate governance of Beacon? Why remove public oversight and place the company in the hands of insiders?” Grybowski asked.

Policyholders over politicians

However, supporters of the measure point out that the change would give more control to policyholders over politicians. Dennis Michaud, a Brown University professor, said the “current status quo” of control of its board by the governor, not policyholders, “runs against policyholder empowerment.”

Supporters also point out that the revision to have one board member appointed by the governor matches the structure for Blue Cross. Beacon would remain a nonprofit mutual.

Editor’s Note: For Beacon Mutual’s position, see the Closing Quote on page 38 in this issue.