A federal district court magistrate has decided in favor of workers compensation insurers who had challenged the constitutionality of a 1995 law change that altered the methodology for collecting assessments from insurers to finance "The Second Injury Fund." This fund was intended to promote the employment of disabled workers. Insurers are reimbursed for part of the benefits paid to injured workers who had a prior disability.
The lawsuit, USF&G v. V.W. Fox McKeithen, et al., alleged that because of a retroactive formula imposed in 1995, insurers paid an assessment twice. According to a spokesman for the American Insurance Association, prior to 1995, assessments on insured employers collected by insurers for the Second Injury Fund were based on premiums written. In 1995, the legislature altered the formula to an insurer's proportionate share of losses paid (indemnity and medical benefits) in the year preceding the assessment. This resulted in insurers being assessed on a "paid loss" basis for losses on which they had already been assessed on a premium basis.
The magistrate's opinion is a recommendation to the federal district court with jurisdiction over the case. The court may accept, modify, or reject the magistrate's recommendation. There is no indication when the federal district court will decide the case. More information about the decision is available at: www.aiadc.org.
Missouri
State's WC performance nears record levels
The Missouri workers compensation market posted near-record financial performance last year. Benefits paid or incurred for 1997 workers injuries totaled 58.7 cents of each premium dollar earned by the insurers--one of the lowest figures in more than 30 years.
Two-thirds of the 301 insurers filed rate reductions that average more than 14% for 1998.
The Missouri business community continues to reap the benefits of improved workplace safety and of 1993 reform legislation that restructured the state's workers compensation market.
Overall, 259 of 301 Missouri workers compensation insurers are now selling coverage at rates lower than those charged in January 1994, when the state deregulated workers compensation pricing in the regular commercial market.
Insurer group fears proposed regulations may hurt consumers
The Missouri Department of Insurance has proposed amending the insurance code with a requirement that insurers maintain declined underwriting files, including the request from the consumer for a quote. Trisha Connors, counsel for the National Association of Independent Insurers, expressed her association's concern that the proposed regulations will cause a deluge of documentation which in the end may impede the consumer's ability to obtain competitive quotes.
At issue for Connors and the NAII is the definition of "application" in the ruling. She points out that the definition includes any document used to question or underwrite an applicant. The rule also specifies that insurers keep all applications for three years.
Since many consumers call several insurers and agents for quotes before deciding which policy to buy, Connors is concerned that insurers might be less likely to provide quotes to consumers if they are required to keep detailed records of all the quotes they give. All in all, she believes the proposed changes will make it harder for the consumer to get competitive quotes.
Oklahoma
Former OAIA exec joins NAIW
Lea E. King, MBA, CIC, CPIW, has been named executive vice president of the National Association of Insurance Women, International, headquartered in Tulsa.
King's responsibilities will include managing the association and ensuring the future success of NAIW's programs and services as well as increasing membership in the association.
Prior to joining the NAIW, King was with the Oklahoma Association of Insurance Agents for eight years as director of education and professional development. Her background also includes working in the personal lines department of a carrier and teaching classes for the Certified Insurance Service Representative program. She was appointed to serve as a member of an advisory committee on continuing education by the Oklahoma insurance commissioner.
New Mexico
State Farm lowers auto rates; increases discounts
State Farm Mutual Automobile Insurance Company reduced its overall auto insurance rates in New Mexico an average of 6.7% effective October 1.
On average, customers will see their premiums drop for the liability, medical payments, collision and comprehensive. The company will also increase its discounts for customers who have a State Farm homeowners, life or health policy.
Specific changes in premiums for individual motorists will vary, depending on several factors, including coverages, where they live, the kind of car insured, who drives the car and how much it is driven. *
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