Privatizing workers’ comp would raise Oklahoma's rates, some say

Small businesses in Oklahoma likely would see their rates go up if the state agency that provides workers’ compensation insurance were changed to a private firm, an industry expert told legislators Wednesday. "Most likely they would see an increase,” said Roy Wood, state relations executive with the National Council on Compensation Insurance.

Sen. Cliff Aldridge, R-Midwest City, co-chairman of the Task Force on the Privatization of CompSource Oklahoma, had asked Wood what effect small business policy holders could expect if the state agency was converted to a mutual operation or a private company.

A special fund would be formed to handle high-risk or small businesses, Wood said. But a mutual or private company probably would charge higher rates because they would be unable to subsidize them as CompSource is able to now, said Wood, whose company, based in Boca Raton, Fla., manages the nation’s largest database of workers’ compensation insurance information.

CompSource has about a 5 percent advantage over private carriers because it doesn’t have to pay premium taxes and doesn’t have to contribute to the state’s guarantee fund, which covers the costs of claims of an insolvent insurance company. A law passed this year states it is the intent of the Legislature to privatize CompSource no later than Dec. 31, 2010.

Jason Clark, president and chief executive officer of CompSource, said after the meeting he was not surprised by Wood’s words.

"We’re good for Oklahoma employers, we provide stability to the rates in Oklahoma,” he said. "We’re there throughout the market cycle.”

Wood said about 6 percent of the workers’ compensation insurance market in Oklahoma would be made up of small or high-risk businesses.

Clark said he didn’t know what percentage of CompSource’s approximately 26,000 policyholders would fit into that category, but estimated it usually averages between 5 and 10 percent. But it could be as high as 20 percent during a weak economy.

"We take all comers,” Clark said. "We don’t ask, ‘Have you been declined coverage elsewhere?’”