STABLE WORKERS' COMP RATE BRINGS CHEERS

SIKESTON - As chairman of the House Insurance Committee the past three years, Rep. Dennis Ziegenhorn has advocated a rate freeze as a way of dealing with the skyrocketing increases in workers' compensation premiums.

The Sikeston Democrat reasoned that freezing rates would take some pressure off businesses that had been hammered by the rising rates and would give new legislation a chance to work.

Finally, the Missouri Department of Insurance announced last week that there would be no rate increase in September for the first time in four years. Department Director Jay Angoff announced the rate freeze after getting word from the National Council on Compensation Insurance the trade association that has traditionally set rates for all workers' comp insurers in the state that it would seek no rate increase in Missouri.

Ziegenhorn said the action is long overdue. He portrayed it as a reaction by NCCI to new legislation allowing open competition for setting rates and diminishing the group's role in rate-setting in the state.

"A freeze is something I have wanted for years," said Ziegenhorn, who noted that rates have climbed at double-digit rates for most businesses, regardless of their claims experience.

"People who say they have had no claims at all are still showing a 38 percent increase the last few years."

In the past 12 years, workers' comp rates have increased 200 percent.

"What Jay Angoff is trying to do is see no rate increase, to give this time to take effect," said Ziegenhorn. "I wanted this two years ago to allow this to work."

A new workers' compensation law signed by the governor last month abolishes the old administered pricing system under which all insurers are charged NCCI rates and replaces it with a system that permits insurers to compete on price.

The new law also authorizes the department to develop a plan that will enable any employer that maintains a safe workplace to buy coverage in the private voluntary market. Under the old law, small employers were often refused voluntary coverage regardless of their safety record and were instead dumped in the pool, a consortium of insurance companies that critics say charge higher rates and provide poorer service.

Beginning Jan. 1, the NCCI will be able to recommend rate-increase amounts, but no longer will be able to establish final rates.

One flaw in the existing law is that it does nothing to reward employers for operating a safe workplace, Ziegenhorn said. "Many businesses are upset, and rightfully so, that if their class of business rates go up, your rates go up regardless of what your experience has been.

"Right now there is no incentive to have a safe workplace. But open competition benefits people who have a safe workplace."

Ziegenhorn said he is no fan of NCCI and supported legislation to diminish its role in rate-setting. He suggested the company is backing off from rate increases simply to protect themselves from being dropped in Missouri.

"They are just trying to protect their own butts by not asking for an increase. Since they get all their data from us, I don't know why we can't create our own form of NCCI within the state."

Angoff said he is pleased with the cooperation shown by NCCI and looks forward to working with it "as well as with individual insurance companies, agents, employers and others toward implementing the "safe employer" provisions.

"Those provisions will enable Missouri to have a competitive workers' compensation insurance market which encourages and rewards safety."

The provisions in this year's bill that enable safe employers to buy coverage in the voluntary market must be submitted to the legislature by Sept. 1. If it does not reject those provisions by Sept. 24, they will take effect Jan. 1.