Group Self-Insurance Associations Have 'Substantially Cut' Workers' Compensation Costs

Article excerpt

Group self-insurance associations, a loose confederation of diverse business interests, have "substantially cut costs" for workers' compensation coverage in Oklahoma since 1982, according to a former administrator of the State Insurance Fund.

Legislative action in 1981 paved the way for many of the state's business leaders to pool their liabilities. Thus far, 14 groups - primarily trade associations - have turned to self-insurance as "an escape valve to reduce pressure on insurance rates."

Chris Sturn, an Oklahoma City attorney who is active in the self-insurance movement, says the proliferating groups now provide options not previously available to employers here. Among the current participants are such trade groups as the Oklahoma Restaurant Association, Associated Motor Carriers, the Association of General Contractors, the Oklahoma Auto Dealers Association, the Retail Grocers and the Association of County Commissioners.

Sturn, who also served as a judge of the Workers' Compensation Court, describes the system of self-insurance as "a highly useful tool." Because it offers attractive incentives for employers to participate, the system has seen enormous growth over the past five years. For example, said Sturm, at least 82 percent of the state's auto dealers have joined forces under the umbrella of a single association.

Up front benefits include a 15 percent premium discount which means, in short, impressive savings.

For the year ending last March 31, said Sturm, the program showed a surplus of $1 million. And, pending approval of the Workers' Compensation Court, which regulates the group associations, some $450,000 will be distributed to association members in December.

"The group health insurance associations treat it as the employers' money," the attorney said. "Because it is."

Sturm calls it a collaborative effort under the banner of the Oklahoma Self Insurors Association. The program now underwrites from 10 to 15 percent of the workers' compensation coverage in the state.

Apart from the system of self-insurance and its gathering momentum, the state, by some accounts, has taken steps to curb costs. Some of those moves, enacted by the legislature in 1985 and 1986, may be on the brink of paying dividends.

Substantive changes in 1986 now compel all cases to be tried on the weight of the evidence, a procedure viewed broadly as helpful to employers. The law repealed presumptions placing the burden of proof on the employers. At the same time, it limits disability payments to 150 weeks.

Under the old law, the maximum disability period was 300 weeks.

Moreover, injured claimants now must be off the job seven days before they can receive payment. Other provisions call for pre-hearing conferences, a procedure calculated to reduce the amount of litigation. Employers also are free of wrongful discharge penalties when workers are terminated for refusing to respond to queries about previous compensation cases.

Not the least of the new provisions is a medical fee schedule which, according to Sturm, appears to be having considerable impact toward "putting costs back in line."

The law empowered the court's administrator to devise a fee schedule and put it in force. …