Losses on workers' compensation insurance policies will be cut down
to "a more palatable level" when the 25.9 percent rate increas e -
approved by the Oklahoma Board for Property and Casualty Rates early
Friday - goes into effect Nov. 1, according to Perry D. "Bud" Inhofe,
president and chairman of the board of Mid-Continent Casualty Co. of
But Roger Pugh, executive director of the approximately
10,000-member Oklahoma chapter of the National Federation of
Independent Business, said the rate increase "will put some of those
folks out of business."
Inhofe, the Mid-Continent Casualty Co. president, had testified at
the rate hearing:
"For every $1 in premiums that we took in during 1984, we had
about $1.28 in losses. We expect the losses to go to $1.38 for every
$1 in premiums in 1985."
After learning of the 25.9 percent rate increase, Inhofe said
Friday in a telephone interview:
"Assuming the same losses in the next year, the rate increase will
cut our losses and loss adjustment expenses to about $1.10 for every
$1 in premium taken in, which is much more palatable than $1.38."
Workers' compensation insurance is the single biggest expense,
outside of salaries, for most owners of small businesses in the
state, according to Pugh.
"In this economy, 26 percent is a ridiculous increase. I really
started to shudder at the thought that it might go over 15 percent.
"I have carbons," Pugh said, "of about 300 letters from smbusiness
owners in Oklahoma to the state board for property and casualty
rates. What I could read between the lines is that 26 percent will
put some of those folks out of business.
"This will deliver a damaging blow to some small business people,
especially on top of the 14.25 percent rate increase the phone
company just got," Pugh said.
The insurance industry had requested a 41.9 percent rate increase
because some major carriers - such as the Hartford Insurance Group
and Mid-Continent Casualty Co. - said their loss ratios had exceeded
100 percent on workers' compensation business in Oklahoma this year.
Gov. George Nigh had asked the board to "delay indefinitely" a
decision on the rate increase because he believes it will cripple the
state's ability to attract new businesses.
"I think the increase was too high and I regret it," Nigh said
Friday. "I certainly don't think it will help Oklahoma's industrial
efforts. At the present time, we're considering a possible appeal."
Vince Elliott, owner of Elliott Trucking in Vinita, had told the
rate board that he will seriously consider moving across the state
line to Kansas, Missouri or Arkansas if a large rate increase went
The board approved the rate increase at 2:15 a.m. Friday after a
marathon public hearing that began at 9:15 a.m. Thursday.
A 6 percent rate increase had been recommended by an actuary
retained by the governor and the attorney general.
Oklahoma employers would have paid about $100.3 million more per
year for workers' compensation insurance if the 41.9 percent rate
increase had been approved.
The price tag of the 25.9 percent rate increase is about $84.2
million more per year for workers' compensation coverage.
Attorney General Michael Turpen, who had intervened in the rate
case at the governor's request, said Friday he may appeal the board's
decision to the Oklahoma Supreme Court.
The board for property and casualty rates acted on the
recommendation of its actuary, Jim Stergiou of New York City, by
approving the 25.9 percent rate increase at 2:15 a.m. Friday.
Stergiou had testified that a 25.9 percent increase in rates would
cut losses for all workers' compensation insurance carriers in
Oklahoma down to an average of about $1.04 for every $1 earned in
Julius Kubier, a spokesman for about 400 Oklahoma manufacturers,
had protested the request for the rate increase, filed this summer,
because a 13 percent rate increase was approved last spring. …