Monday, March 8, 2010

Weekly Opinion/Editorial
by Steve Fair

Some Republicans in the state legislature want to sell CompSource aka The State Insurance Fund. State Representative Dan Sullivan, (R-Tulsa) and Senator Cliff Aldridge, (R, Midwest) are pushing to sell CompSource to the highest bidding private insurance company. Other legislators want to turn it into a cooperative- owned by the policyholders.
A seven member Task Force considered what to do with CompSource. They released a 303 page summary in December 2009. You can access it at The seven members of the Task Force were:
Senator Cliff Aldridge, Task Force Co-Chairman
Representative Daniel Sullivan, Task Force Co-Chairman
Insurance Commissioner Kim Holland
James Stergiou, Chairman and CEO, SGRisk, LLC
Michael Clingman, Director, Office of State Finance
Mike Seney, Senior Vice President, Operations, The State Chamber
Lee Ann Alexander, Liberty Mutual

Dan Ramsey, President & CEO, Independent Insurance Agents of Oklahoma

They voted to move forward with a proposal to try to sell/privatize CompSource.
HB 2262 authored by State Representative Dan Sullivan, (R-Tulsa) has already cleared the House. It would sell CompSource to the highest biding private insurance carrier. Several companies have expressed an interest, if not for no other reason than to just to get it out of the marketplace. “We are very much behind the effort to privatize CompSource because frankly, the government should not be in the insurance business. We don’t do this in any other line of insurance,” Sullivan says.
CompSource is an insurance company created by the state government in 1933 at the height of the depression because there were not enough private companies willing to write the ‘required’ workers compensation insurance for businesses in the state. CompSource was established as a non-profit, self-supporting entity. Sullivan and Aldridge believe the need for CompSource has past and it should be eliminated and let the free market work. In most instances, any limited government, conservative Republican would agree, but this issue is not typical. I disagree with the sale of Compsource.
Currently, CompSource writes about a third of the workers comp policies in the state. They are the carrier of choice for most municipal government, schools, and volunteer fire departments because private insurance will not write them because the chance of paying claims is too high. These organizations are required to have workers compensation and often CompSource becomes their last resort option to obtain the ‘required’ coverage. If they are forced to move to a private carrier whose rates are higher, taxpayers will pick up the tab.
Sullivan estimates the sale of CompSource would add $350 million to the state’s general fund. In a down budget year, that could be the motivation behind the selling of CompSource. After all, that gives the lawmakers more money to spend. Trying to raid the State Insurance Fund is not a new concept. Back in 1975, the legislature tried to gain control of certain assets in the fund, but the State Supreme Court declared those efforts unconstitutional because it violated the intent of the State Insurance Fund act. “No one is suggesting that we raid the assets," Sullivan claims. But it remains unclear why Sullivan and Alridge want to have a garage sale at CompSource.
Oklahoma businesses do not support the sale of CompSource. Fifty five percent of the members of the National Federation of Business in Oklahoma oppose the sale, as does the State Chamber of Commerce Board of Directors. James Stergiou, the actuary for CompSource estimates that rates would increase ten to twenty percent if the sale goes through. With high workers comp rates already, that’s something Oklahoma business and consumers don’t need. If workers comp premiums go up, prices go up in the state. Businesses and corporation don’t pay taxes- individuals/consumers do.
Selling CompSource is not a well thought out idea for the following reasons.
First, if government requires businesses, cities, schools, organizations to carry workers compensation insurance, then government should be also provide a way for that mandate to be satisfied. CompSource does that. Some entities can’t get private insurance to write them coverage because of past claims. CompSource cannot turn down anyone. They are often the carrier of last resort. I realize having government involved in private industry is not ‘Republicanlike,’ but CompSource is not a typical ‘moneypit’ governmental agency that drains taxpayers. It costs the taxpayer nothing and provides a service to business/municipalities/schools.
Second, if getting the state out of the insurance business is that important- why not make CompSource a cooperative by mutualizing it? That would allow the insured to have a stronger voice in the carrier’s operation. It would leave CompSource intact and ‘privatalize’ it by giving the people with the most skin in the game ownership and equity.
Third, Oklahoma has much bigger issues in our workers comp system than CompSource. Oklahoma has some of the highest workers comp premiums in the country and the lowest benefits paid to injured workers because attorneys are involved in workers comp disputes. If rates will go up with the sale, then Oklahoma businesses would pay more for workers comp coverage. Sullivan(a lawyer) and Aldridge(insurance agent) should be working to try and get the lawyers out of the workers comp system, not working to eliminate CompSource.
Republicans have had control of both chambers of the legislature since 2008, but Oklahoma businesses are still paying high workers comp premiums and trial lawyers are still getting the majority of settlement money. Oklahoma businesses and injured workers continue to wait patiently for true workers comp reform. When time is wasted on issues that don’t deal with the root problem, creditability is damaged. Come on Republicans- major on the majors!


Mike Seney said...

Good analysis. Howevery, I must point out that the majority of the Task Force did not " to move forward with a proposal to try to sell CompSource to a private insurance company."

Five of us wanted it "mutualized", not sold.

Steve Fair is a political activist. said...

Thanks for your comments- I stand corrected- I should have said, 'voted to take it private.' I understand the issue is dead at this point- at least for this session. I believe mutalizing CS would be fine, but quite frankly, why not just leave it alone?

Thanks for serving on the task force- I appreciate people who are willing to take on issues like this.