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Senator May Seek Overhaul of Workers Comp Rate Process, Better Representation for Businesses

On the heels of the first increase in workers compensation rates since 1992, a state lawmaker is considering legislation that would overhaul the rate review process in an effort to make it more fair to consumers, namely Oklahoma businesses.

"In this latest rate hearing, it seemed like all the cards were stacked against Oklahoma businesses and in favor of the insurance industry. The Senate was the only entity that spoke up on behalf of the consumers and it was barred from participating in the process. There has to be a better way," said Senator Brad Henry.

On Tuesday, the State Board for Property and Casualty Rates voted to boost rates by 5 percent, ignoring positive market trends such as declining claims, awards and attorney involvement. The actuaries representing the board, the Attorney General's office and the insurance industry all recommended increases, but an actuary for the State Senate dissented, recommending a 2.7 percent decrease for businesses instead.

The board, however, voted not to consider the Senate actuarial report after hearing objections from an insurance industry representative and an official with the Attorney General's office. It subsequently voted to approve the first comp rate hike in seven years.

"If you're striving to be an impartial regulator, why would you discard an important piece of evidence like an actuarial report, especially when your ultimate decision is going to cost businesses millions of dollars?" asked Senator Henry.

"That kind of behavior fosters the perception that businesses can't get a fair hearing in the current rate-making environment. It's a horrible signal to send about Oklahoma's business climate."

In the months to come, the Shawnee legislator said he would be researching rate review processes in other states, trying to determine if there is a way to improve Oklahoma's system.

"Hopefully, a thorough examination of this issue will yield some ideas that will help us build a better process. We'll look at the areas that are broken and see if we can fix them," said Senator Henry.

The problem, according to the lawmaker, may lie with the board and its appointing authority. The Governor appoints four members of the five-member regulatory panel. All four of those appointees voted for a rate hike Tuesday.

"Historically, we've gotten into trouble by putting too much power in the hands of one person, and we may be witnessing that same kind of problem with the Property and Casualty Board. It might be more appropriate to divide the appointments among several appointing authorities so that the Governor alone would not control whether businesses got a rate cut or a rate increase," noted Henry.

Senator Henry said he hoped to have his research completed before the end of the year so a bill could be filed for consideration during the year 2000 legislative session next February.

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Senate Communications Division - (405) 521-5605