NEW DIRECTOR: ANGOFF VIEWS INSURANCE PRIORITIES

As the new director of the Missouri Department of Insurance, Jay Angoff is devoting attention to several priority areas that include workers' compensation, health insurance, homeowners insurance, and the solvency of companies.

Angoff was appointed to the post by Gov. Mel Carnahan in January and confirmed by the Senate in February. He moved to Missouri from New Jersey, where he had worked as a special assistant for health insurance policy for the governor and served as a deputy director of the state's insurance department.

Angoff was in Cape Girardeau for a recent meeting. It was his first visit to the area.

He said that while workers' compensation has been one of the biggest problems facing the state in recent years the role of his department with the issue is limited since there is a state Division of Workers' Compensation under the Department of Labor and Industrial Relations.

Angoff said he believes the law state legislators approved this year will go a long way toward reducing rates for small businesses. Skyrocketing workers' compensation rates have kept some businesses from expanding and has forced some to close.

"We have a lot of obligations under the law to complete by Jan. 1," said Angoff. "There is relief for small businesses that have good loss experience, and that is what we have been directed to do."

The department's most urgent task under the new law is to define what constitutes a "safe employer." He pointed out that about 30 percent of the businesses in the state have been put into a high risk workers' compensation pool, which has driven their rates up. In many instances, businesses have been put in this pool, even though they have not had high losses.

"Under this law, if a business meets that definition they will have a right to buy workers' comp in the voluntary market. If it meets the definition, it won't be dumped into the assigned risk pool," said Angoff.

"A lot of small businesses with good records are put into the pool because some insurance companies just don't want to write smaller companies because the profit is not there. There should not be 30 percent of the market in the pool - that just shouldn't be. It's too high. Companies should not be put in the pool simply because they are small."

Another problem with the assigned risk pool is that administrative costs are high, which drives up the rates, Angoff said.

The new law also establishes by March 1995 a Missouri Employers Mutual Insurance Co., which will be governed by a five member board. Angoff said he was "ambivalent" to the mutual, but it would work only if there is a good definition of safe employer.

If run right, the mutual company could set the stage for competitive rates among insurance companies.

Angoff said he is pleased that the bill reduces the role of the National Commission on Compensation Insurance, which has basically established the rate system for workers' compensation in the state. Using NCCI means there is no price competition and every company is charged the same rate.

Under the present system using NCCI, Angoff said, "Insurance companies don't aggressively try to control costs or risk. They take the risk given to them and take on the rate."

Under the new system, Angoff explained that NCCI will provide some data for use in rate setting, but basically the system will be open competition.

During the last legislative session a bill was passed on health care and was devoted more toward access to care rather than insurance. Angoff said whatever health care and insurance plan is ultimately developed at the federal level, there will continue to be private insurance companies involved.

"But they will have to compete on price and service rather than excluding risk," said Anogff. "In the past, health insurance companies have competed by insuring as many healthy people and as few sick people as possible."

One of the biggest problems in Missouri Angoff found was concern about difference in homeowners insurance rates around the state. Urban legislators expressed concern to Angoff that blacks in the cities were either having difficulty getting homeowners insurance or paying higher premiums than whites.

Angoff said it is a difficult issue that his department will be trying to address. On one hand, it is unfair to discriminate against blacks living in cities because there are homes that are good risks, he said. But requiring companies to insure people in the inner cities would lead to higher rates around the state, he said.

Larger insurance companies like State Farm and Allstate contend it is unreasonable to require them to insure everyone, while smaller insurance companies in the state are based in small towns and have agents and expertise in small towns and rural areas, not urban areas.

"Fair discrimination is what insurance is all about," said Angoff, "but unfair discrimination is against the law. If you are using objective-risk-based criteria, the result is people in certain areas pay more; that is not against the law as long as the criteria is risk related."

Angoff said a major concern of his department is seeing that insurance companies operating in Missouri have enough reserves to pay claims and that the annual statements are accurate.

Angoff said he was looking at ways to make sure that insurance company financial data is studied carefully to make certain the reports are accurate to see that consumers are protected.