WORKERS' COMP COSTS GO DOWN AGAIN

When legislation was passed by the Missouri General Assembly in 1993 to deregulate the workers' compensation insurance industry, there were widespread calls for reform but some lingering doubts about how the new law would work in the marketplace.

Workers' compensation provides coverage for workers who are injured on the job. Missouri businesses are required to carry this coverage, and for many years prior to 1993, the premiums -- set by the Department of Insurance -- had been skyrocketing.

One of the things the 1993 law did was set up a publicly funded workers' comp insurer, Missouri Employers Mutual Insurance Co., or MEMIC, as it is known. With $5 million of state money, MEMIC began offering workers' comp coverage at significantly lower rates, forcing the more than 300 private insurers to compete. Instead of rates set by the Department of Insurance, workers' comp rates now are set competitively and are based on claims experience in the state.

The legislation that created MEMIC and competitive workers' comp premiums received strong support from Associated Industries of Missouri, whose members represent virtually every business sector in the state. An AIM spokesperson says the organization has been extremely pleased with the results.

And what are those results? The Department of Insurance recently announced that workers' comp premiums overall dropped 9.8 percent last year from 1997, and the rates have dropped 20 percent overall since the 1993 legislation was adopted. In all, the department calculates, Missouri businesses have paid millions of dollars less in premiums -- $51 million less in 1998 alone.

MEMIC was created with a $5 million loan from the state. The company, which currently has some 15,000 policyholders -- about 20 to 25 percent of all workers' comp policies in Missouri, is scheduled to repay that loan this September. MEMIC officials indicate the loan will be repaid on time. This means the state's taxpayers will recoup the investment plus interest, and businesses have kept millions of dollars that otherwise would have been spent on workers' comp premiums.