LEGISLATOR SUPPORTS MOVE TO DUMP RATE-SETTING PANEL

The chairman of the Missouri House Insurance Committee said Friday he wants to end the state's relationship with the National Council on Compensation Insurance as the rate-setting organization for workers compensation premiums.

"I definitely want to get rid of them," said state Rep. Dennis Ziegenhorn, D-Sikeston, who complained the organization has been part of the problem for skyrocketing rates and has not been responsive to concerns of businesses.

Ziegenhorn said he believes Jay Angoff, the director of the Missouri Department of Insurance, has the authority to end the state's relationship with NCCI and create its own entity to set rates. If not, Ziegenhorn said he is willing to sponsor legislation to accomplish that.

More than 30 states rely on NCCI to set its workers comp rates and in all, about 40 states use the Florida firm for some information.

Ziegenhorn said his first direct experience with the company came in the fall of 1991 when he served on a joint interim committee studying the increasing costs of workers comp coverage.

"At a hearing in St. Louis was the first time I realized NCCI was a bunch of jerks," said Ziegenhorn. "They knew they were coming before a workers comp committee and that we had questions for them, but they had no answers, nothing but excuses and comments like `we'll look at it.' I think it was at that point the committee realized they are not playing in the same ballgame as us."

Ziegenhorn said one of the big problems raised with NCCI was difficulties businesses were having getting a classification change reconsidered by the company.

"We heard many complaints that NCCI would not give them a hearing or return phone calls," said Ziegenhorn.

The representative contended that changing classifications by NCCI "is a way to give a rate increase to people who don't deserve it."

Ken Robinson of Comp Check in St. Louis, wholeheartedly agrees with Ziegenhorn's assessment. "He has hit it right on the head," said Robinson, whose company attempts to help businesses that have disputes over classifications or any other components that make up premium rates.

Robinson, who worked 23 years for NCCI before leaving in August 1990, has been hired by Roger Mainor of Magnetic Collectibles, to help him with problems over that classification change.

Robinson has appeals pending right now for nine clients. He admits getting a change will be difficult.

"Once NCCI makes a decision, it is pretty much cast in stone," said Robinson.

The problem is there is no independent body to file an appeal with over classification differences.

Robinson explained that the policy contract written for workers comp coverage gives NCCI the right to come in and inspect the premises to help in determining premiums. State law requires that the classification system be uniform and that each company use the same codes and rules to apply those codes.

Insurance companies use NCCI to develop classifications and to enforce them after they are filed.

At one time, appeals could be taken to the Classification and Rating Committee, which was made up of representatives of the largest insurance companies selling workers comp in the state. The committee had several functions, including hearing appeals, but it was abolished early in 1992 because of concerns by NCCI about possible anti-trust implications.

"Disbanding the committee had nothing to do with the appeal process," said Robinson.

After some discussion, it was decided by state legislators to set up an appeal board known as the Determination Review Board, in a workers comp reform bill, HB-975. The bill specified that five members would be appointed by the governor and confirmed by the Senate.

The board was to have three representatives of employers, with at least one of those representing employers that had employees represented by labor unions and at least one employer that did not. The other two members represent insurance companies, including one representing independent companies.

But Gov. Ashcroft, who left office in early 1993, never filled the board, and Gov. Mel Carnahan has not done so during his first year in office. Consequently, there is a huge backlog of pending cases that could take months to clear up.

Technically, Robinson said the Department of Insurance can provide an administrative appeal, but lacks the staff to deal with classification differences except in instances where the problem is very serious.

At this point, Robinson said the possible solutions for people like Mainor "are all blind alleys."

Chris Sifford, communications director for the governor, said Thursday he was unsure what the timetable was for fillng that board and said he would check on it.

Ziegenhorn said the appointments need to be made as quickly as possible, but pointed out the director of the insurance department needs to be involved in the process and has been busy with other pressing matters.

"What the problem has been is that Jay Angoff is working on setting up the mutual insurance company required in last year's workers comp bill and has other things going like the governor's proposed health insurance plans.

"His plate is just overflowing, but I know he and the governor are trying to get together on this," Ziegenhorn said.

Sen. Peter Kinder, R-Cape Girardeau, said he is concerned that the determination board has not been filled so people like Mainor can have an appeals process.

"The board has existed for two years and yet there are no members on this board," said Kinder. "There needs to be a place to appeal a classification determination by NCCI and what rates should govern."

Robinson said he believes Missouri would be better off developing its own version of NCCI that can react to the special needs of this state. He noted that Michigan and Minnesota have established independent organizations and found them to be effective in helping to curb costs and improve communication.

The independent company could be funded by a small charge assessed against premiums.

"NCCI is a national organization and anything they have to do on a state-specific basis causes a disruption," said Robinson.

But regardless of what is done with NCCI, Robinson, Ziegenhorn and Kinder agree that an appeals board needs to be in place as soon as possible.

"You either have to have something like an appeals board or give the insurance department enough money hire staff to handle complaints," said Robinson. "Complaints have to be handled someplace."

Ziegenhorn maintains that whatever independent organization is created to replace NCCI can't be any worse than NCCI. He and Robinson point out that the state insurance department provides the data used by NCCI to compile rates.

Ziegenhorn says it is ironic that the state provides the information to NCCI and then the company is not responsive to businesses.

"It's kind of like feeding the fox that guards the chicken house," said Ziegenhorn. "I think in the long run, having an independent organization of our own would be cheaper. It is more of a hands-on approach where we can talk to the people and where our employers can get a return phone call.

"I'm a firm believer we can do this, save money, and do a better job than NCCI is doing."

Ziegenhorn added that the problem Magnetic Collectibles is having, is "a prime example of how businesses are victimized by NCCI."