Workers' Compensation Rates Rising While Payroll Costs Are Steady / Says Insurance Council Director
Tipton, David, THE JOURNAL RECORD
Oklahoma is in a situation where the cost of workers' compensation benefits has continuously risen while the payroll costs for employers have held relatively steady, according to Roy Wood, director of government, consumer and industry affairs for the National Council on Compensation Insurance.
In a meeting of a joint committee of the Oklahoma Legislature on workers' compensation rates this week, Wood provided the members with a graph which shows that wages for all payrolls in the state have increased about 36 percent from 1979 to 1986.
However, the cost of medical care in Oklahoma has increased about 82 percent in that same time period, while hospitalization costs have gone up approximately 88 percent.
Medical costs are one of several factors which the insurance council considers when it files a rate request.
Wood told the committee 37 percent of the cost of workers' compensation benefits paid goes for the employee's medical bills, while the remaining 63 percent covers indemnity - the employee's lost work time.
"The cost of benefits have outstripped the payroll," Wood said.
He emphasized that when the council files a rate request, it is not to provide insurers with a way to recoup losses for past years - though the amount of premiums paid in and losses paid out are an important factor in determining what a rate request should be - but a means by which insurers can provide workers' compensation coverage at rates based on anticipated future trends.
The last rate increase granted by the Oklahoma Property and Casualty Board was 41.9 percent in 1985, but the Oklahoma Supreme Court ordered the rates rolled back to the previous 25.9 percent. Still, insurers in the state are allowed consent to rate, which essentially means employers having a difficult time obtaining workers' compensation insurance agreed to pay an insurer a negotiated rate for the insurance - oftentimes much higher than the 25.9 percent rate.
The insurance council has filed a 33.8 percent average increase in workers' compensation insurance in Oklahoma, but in the legislative meeting, council officials estimated that if consent to rate were taken into account and if the Oklahoma Insurance Fund offers workers' compensation at about the same rate, the rate increase would only cost workers in the state $18 million - compared to a $120 million cost if the rate increase were considered above just the official 25.9 percent rate.
Asked if employers should be wary of a significant rate increase proposal when the council evaluates Oklahoma's workers' compensation system again in the next two years, Wood replied:
"Well, no, because the request is based on past experience and what trends we expect in the future. If there is an indication of a need for a rate reduction, we will ask for that." . .
Bellmon Has `Nothing Definite' on Japanese Coming to Oklahoma Gov. Henry Bellmon said in a press conference Friday he had "nothing definite to announce" about any Japanese companies coming to Oklahoma.
Bellmon returned Wednesday from a reverse trade mission to Japan in which he and individuals from the private sector visited with representatives from various businesses.
In a teleconference news conference Monday, Bellmon stated a major Japanese firm had stated its intentions of setting up operations in Oklahoma and would make a formal announcement in the near future. When questioned about his statements Friday, Bellmon said:
"I have nothing definite to announce. There were several Japanese companies interested in Oklahoma but the problem is that they will have to make arrangements to set up operations in the area of the state where they want to locate, and all these things take time."
In addition, he said he expects any wrongdoers to be prosecuted for activities at Southeastern Oklahoma State University that Bellmon labeled as being ``clearly outside legal bounds. …