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Competition picking up for workers’ compensation coverage

In the late 1980s and early 1990s, a number of insurance companies stopped writing workers’ compensation coverage in Mississippi. Many businesses couldn’t afford coverage even when they could find it. Legislation was passed to enable trade groups to begin self-insurance programs for their members. These programs have been well received. Now things have changed, and insurance companies are eager to begin covering workers’ comp again.

“We have 15 self-insuring trade groups in Mississippi now,” says Liles Williams, chairman of the state Workers’ Compensation Commission. “That was one of the big things that assured we would have viable industry. Thanks to that and tort reform, commercial companies are coming back to Mississippi.”
He feels it’s now a buyers’ market —good news but maybe not for the self-insured groups. “Competition is good and we do not want to curb that business,” he adds. “It’s challenging them but they’re not asking for a change.”

Dan Gibson, executive director of the Mississippi Association of Self-Insurers (MASI), affirms that members of his organization will most definitely stay with their self-insured programs for workers’ comp.

Positive results

“We do see more competition but our programs are doing very well,” he said. “There are so many benefits to being self insured. When we look at the figures, self-insured companies do better. They have a lower loss ration and are able to maintain a more level premium history. Rate increases are not as dramatic.”

He says those positive results are because the self-insured companies have a vested interest in keeping work environments safe. “They care about their employees and about keeping business in the state,” Gibson says. “These groups are not big insurance companies trying to make a profit.”

Williams agrees that the self-insured programs are doing well. “They’re collecting premiums from participating members approaching $200 million per year, and they’re paying almost 50% of all claims. It’s a good balance and a healthy thing for the state,” he says.

He notes that claims are down, according to reported accidents tracked by the commission. The year of 1994 was a high water mark for lost-time accidents with 20,557 reported. The commission tracks these accidents year by year, and the total has declined every year since 1994. In 2005, there were 12,537 lost-time accidents reported and 12,598 were reported in 2006.

“That’s a significant decline from 1994,” Williams says. “We have no scientific research to prove it, but we know some factors.”

He believes those factors include the state’s loss of manufacturing jobs for less dangerous service sector jobs and the outstanding job employers have done in educating their employees to be safer.

Still, Williams says the amount of dollars spent on workers’ compensation claims continues to escalate because medical costs and employees’ salaries have increased.

The Associated General Contractors of Mississippi (AGC) represents a potentially risky industry and runs a self-insured program for members. It’s so well run that $8 million has been given back to members in dividends.

Boosting safety, saving money

“It’s one of the best programs we’ve ever done for our membership,” says Perry Nations, executive director. “We’ve managed to keep accidents down and improve safety records for members along with giving money back to our members.”

The AGC has full-time safety facilitators in Jackson and Gulfport who are constantly putting on classes, drawing 30 to 40 participants for every class.

Nations thinks the Worker’s Compensation Commission is doing a wonderful job, noting that it brought in independent consultants to audit every self-insured program in the state.

“The consultants found we’re doing what we’re supposed to be doing. That’s a good plus,” he says. “We will be audited every three years.”

He also agrees with a change that requires trade organizations to be in existence in Mississippi at least five years before starting self-insured programs.

The Mississippi Manufacturers Association (MMA) began a self-insured program in 1991, and currently has 300 companies participating with 14,400 employees covered. Foster Welburn is director of MMA’s Workers’ Compensation Group. He says MMA won’t drop its program in spite of standard carriers coming back into the market.

“We have such a variety of companies in MMA. We cover a lot of different jobs,” he says. “Safety and loss control are the driving forces in our program. That’s one reason I don’t think our board of directors will relinquish this program. They mutually pledge the net worth of their companies. They have an interest in this fund doing well and everyone being safe.”

Welburn, who’s worked with workers’ comp for many years, is pleased that the MMA program has given back approximately $6 million in premiums to members. “That money stays in Mississippi,” he says.

MMA’s four full-time safety engineers and an occupational therapist certified in ergonomics travel the state to actively promote safety among members. Welburn says the therapist was added in response to an expressed need from members. The organization also provides safety information online, through printed materials and with a 60-volume library of videos. All materials are now in English and Spanish to reflect the current manufacturing environment.

Contact MBJ contributing writer Lynn Lofton at llofton656@aol.com.

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