STATE TRIES TO BRING SKYROCKETING WORKERS' COMP COSTS UNDER CONTROL

Missouri Department of Insurance officials are taking steps to continue to bring skyrocketing costs of workers' compensation to businesses under control.

By the end of the year, Director Jay Angoff will decide what the rate increase will be for companies in the state's assigned risk pool, and a decision will likely be made on whether to contract with a new administrator for the pool.

Another development next year will be the beginning of the Missouri Employers Mutual Insurance Co., a company formed by legislation passed in 1993 to get small companies with good risk records out of the assigned risk pool.

That company will have authority to begin writing workers' compensation policies March 1.

Since 1987 many employers have faced double-digit annual increases in workers' comp costs, even though they have had good safety records.

The higher costs reached crisis proportions, forcing the legislature to act with changes in the 1992 and 1993 sessions.

In the 1994 session, workers' compensation reform became stalled after Gov. Mel Carnahan and some legislators suggested further reforms should be withheld until legislation passed the two previous years had a chance to work.

One proponent of further reform is Sen. Peter Kinder, R-Cape Girardeau, who thinks lawmakers haven't gone far enough to control costs.

He predicted a bipartisan effort in the 1995 session to make further changes. Kinder supports legislation to reduce attorneys' involvement in workers' compensation cases, to provide a stricter definition of accidents, and to tie payments to work-related events only.

Sen. John Scott, D-St.Louis, and Sen. Franc Flotron, R-Creve Coeur, the Senate minority leader, will file a bill.

Kinder said, "Our business community, in order to preserve a climate for jobs, cannot afford this to be a massive social program to compensate people for any deteriorated condition in life, whether work-related or not. We have to get back to the concept of work-relatedness."

Missouri law requires all construction companies and firms with five or more employees to purchase workers' compensation coverage. The assigned risk pool extends coverage to employers whose attempt to buy coverage in the regular commercial market are rejected.

But Randy McConnell from the Missouri Department of Insurance explained that in recent years smaller companies have been forced into the pool because commercial insurers haven't wanted to insure them. That has driven their premium costs up considerably.

When the Missouri Employers Mutual Insurance Co. starts March 1, it can write coverage for companies with premiums less than $10,000 annually. McConnell said that should remove small companies with good records from the pool.

Angoff has until the end of the year to decide what the rate increase should be for companies in the assigned risk pool.

The National Council on Compensation Insurance (NCCI), the pool administrator, is recommending increases of between 14.4 and 22.4 percent, depending on a company's classification.

In 1994, NCCI suggested an increase of about 20 percent, and Angoff permitted no increase.

McConnell said a contract actuary hired by the state is recommending no increase for 1995.

Action on the current request could affect premiums for about 25,000 companies next year. That represents about 40 percent of the companies in the state that buy commercial insurance and about a third of the workers.