Oklahoma City, OK – Legislation that would privatize CompSource Oklahoma, the state’s workers’ compensation insurer, was recently approved in a House committee.
HB 2201, by state Rep. Randy Grau (R-Edmond), would convert CompSource Oklahoma from a state entity to the new CompSource Mutual Insurance Company, a private, mutualized company owned by policyholders rather than the state.
Grau, who spoke for the bill in committee, said the legislation is part of the package of bills promoted by Governor Mary Fallin to improve the workers’ compensation system in Oklahoma.
“The intent is to shrink the size of state government, while continuing to ensure that Oklahoma workers and businesses will be protected,” said Grau. “CompSource has enjoyed many competitive advantages over private insurers for many years, and this bill will level the playing field. It is part of the effort of legislative leaders to reform and overhaul the entire workers’ compensation system”
CompSource is the state’s insurer of last resort for workers’ compensation insurance. It is required to write policies for all applicants, especially applicants in the residual market who are often turned down by private insurers due to risk concerns.
While CompSource has been a state entity since the 1933, it has never received state appropriations. And while most state agencies obtain coverage through CompSource, only about 12 percent of CompSource’s business comes from state agencies. Many of its policyholders are startup small businesses.
Creating a private, mutualized CompSource, which was recommended by a legislative task force in 2009, is a legislative priority for Gov. Mary Fallin, said Secretary of Finance and Revenue Preston L. Doerflinger.
“State government has no need to continue running an insurance company. States such as Texas, Utah and Kentucky have already gone through this process with their equivalents of CompSource and benefited greatly from it,” Doerflinger said. “This model better serves the policyholders, particularly those small, startup businesses that rely on CompSource for required coverage that private providers often won’t provide. The governor’s intent in asking for this proposal is to help those businesses while right-sizing government by getting it out of the insurance writing business.”
Workers’ compensation insurance rates are one of the top concerns faced by current and potential businesses in Oklahoma, Grau said.
“It is clear that in addition to having a competitive tax rate, Oklahoma needs to have a competitive workers’ compensation system in order to attract jobs to the state,” said Grau.
House Bill 2201 was approved by the Oklahoma House Insurance Committee. If approved by the House Calendar Committee, it will be advance to the House floor.
Source: OK House of Representatives