Workers' Compensation Rate Hike Rejected

By Paschal, Jan | THE JOURNAL RECORD, July 25, 1986 | Go to article overview

Workers' Compensation Rate Hike Rejected


Paschal, Jan, THE JOURNAL RECORD


landmark decision, on Thursday overturned a 25.9 percent rate incre ase in workers' compensation insurance premiums and ordered a refund for the state's employers.

"It's a landmark decision," said Attorney General Mike Turpen, also a candidate for governor, who had intervened in the rate case on behalf of business owners.

The Oklahoma Supreme Court ruled that the insurance industry failed to present sufficient evidence to justify the 25.9 percent rate increase, according to the 16-page majority opinion written by Justice Marian Opala.

No one could calculate the size of the refund on Thursday.

However, the 25.9 percent rate increase - in effect since Nov. 1, 1985 - would have cost Oklahoma employers $79 million more a year than what they had been paying, it was estimated last fall by theState Board for Property and Casualty Rates.

"It's a victory for business people in Oklahoma, especially small business people," Turpen said.

State law requires all businesses, with the exception of sole proprietorships under certain conditions, to provide workers' compensation insurance to cover employees for job-related injuries, diseases and deaths.

Several small business owners had testified at the rate hearing last fall that a 25.9 percent increase in their workers' compensation insurance premiums could force them to lay off employees, delayexpansion plans or possibly close their doors.

Turpen noted that the high cost of workers' compensation insurance in Oklahoma also had been cited as the state's "No. 1" obstacle in its attempts to attract outside industry to the state.

Julius Kubier, a spokesman for the Oklahoma State Chamber of Commerce and Industry, said the decision "is a real bombshell. . .You're going to see some very upset insurance companies."

Of the rate rollback, Kubier said:

"Jackin' the rates back keeps us much more competitive on economic development from within and without. It will make it possible for companies to have funds available that they didn't have before."

Premiums should go down to an average rate of about $3.16 per $100 of payroll, after the refunds are made, Kubier said.

However, refunds will not be made immediately, according to David Elenburg, administrator of the State Insurance Fund, which provides workers' compensation coverage for more than 10,000 Oklahoma businesses.

And some businesses that agreed to consent-to-rate arrangements with their insurance firms may not get refunds at all, said Assistant Attorney General Bill Bullard.

When Bullard was asked whether the attorney general's office may litigate the consent-to-rate issue, he replied: "You bet."

About 3,000 consent-to-rate documents are on file with the state insurance commissioner's office.

Consent-to-rate agreements give an insurance firm the right to charge a policy holder a rate higher than the rate approved by the state rate-making board.

However, Bullard said there are legal questions concerning the propriety of certain consent-to-rate agreements because it appears some firms are using them to guarantee the 25.9 percent rate increase, regardless of the Supreme Court's decision. …

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