Legislation is currently pending in the Oklahoma legislature that proponents say would privatize its nonprofit workers’ compensation insurance fund and turn it into a private domestic mutual insurance company.
The state Chamber of Commerce and the Independent Insurance Agents of Oklahoma support the bill, however the American Insurance Association opposes it.
An AIA spokesman says the trade group supports the true privatization of the entity, known as CompSource, “but these bills do not accomplish that purpose.”
H.B. 2201 passed the House Insurance Committee Feb. 28. The next step is approval for floor action by the House, if approved by the House Calendar Committee.
Under the legislation, CompSource would be mutualized. It would continue to serve its current policies and obligations as well as remain the guaranteed provider of workers’ compensation insurance in the state.
However, the bill removes some of the advantages the state-sponsored entity currently enjoys by requiring that CompSource pay assessments to the Oklahoma Property and Casualty Insurance Guarantee Association, pay state taxes and have increased regulation by the Oklahoma Insurance Department.
CompSource President and CEO Jason Clark says he supports the governor’s plan “for government modernization.”
He says, “We believe that it achieves the legislative intent of privatization while protecting the interests of our employees, policyholders and the Oklahoma small business community.”
Republican Rep. Randy Grau of Edmond says CompSource currently enjoys competitive advantages over private insurance companies and that his proposal will "level the playing field."
He added that, “State government has no need to continue running an insurance company.”
Mike Seney, Senior Vice President for the State Chamber of Oklahoma, said the bill protects small businesses.
Secretary of Finance and Revenue Preston L. Doerflinger says states such as Texas, Utah and Kentucky “have already gone through this process with their equivalents of CompSource and benefited greatly from it.”
“This model better serves the policyholders, particularly those small, startup businesses that rely on CompSource for required coverage that private providers often won’t provide,” Doerflinger says.
Benjamin Tomchick,” AIA public affairs manager, though, says the bills are a “mischaracterization of privatization and would perpetuate an non-level, unfair playing field for insurers in Oklahoma.”
Legislators in Oklahoma want it both ways, Tomchik contends. “They want the insurer to have the benefits of a private insurer while continuing to benefit from state sponsorship.
“No private insurer enjoys such benefits and for true privatization to occur, neither should CompSource,” Tomchik says.
CompSource was created by the Oklahoma Legislature in 1933 as an insurer of last resort and to serve the small-business community.