Oregon Workers’ Comp Market On the Downslide, NAII Says

Potential problems within Oregon’s state insurance fund could further jeopardize a struggling workers’ comp market, according to testimony by a representative for the National Association of Independent Insurers (NAII).

The state’s three-way market for industrial insurance allows employers to self-insure or purchase coverage through the state fund or private insurers. But without corrective action, Melvin N Sorensen, assistant vice president and Northwest regional manager of the NAII, believes most Oregon employers that do not self insure could be left with only the State Accident Fund, eliminating the benefits of competitive pricing, continual service improvements and improved value.

Of special concern to Sorensen is that SAIF has been applying dividend to premiums that bring down workers’ comp premiums as much as 95 percent of earned premium, meaning many employers are being charged on 5 percent of the premium otherwise payable.

The SAIF is also reportedly pricing coverage at levels that are arguably below cost. Earlier this year, a company seeking a retro premium with $50,000 in estimated losses was quoted $68,802 by SAIF—with a $67,234 dividend—for a total premium of only $1,568. Standard premium for the employer was listed at more than $268,000 before prepayment credits, retro plan adjustments and dividends. “Quotes we’re seeing in the marketplace show that SAIF may not be actually giving away insurance, but it’s close to it,” Sorensen said. “Dividends of this magnitude mean that SAIF is offering coverage at a rate that is far below the actual cost of servicing the business and underwriting the risks of loss.”

Topics Workers' Compensation Oregon