Senate Appeals Workers Comp Rate Hike, Seek Lower Costs for Businesses

The State Senate filed an appeal with the Oklahoma Supreme Court today, attempting to overturn a recent workers compensation rate hike on Oklahoma businesses. The action seeks a new hearing on a 5 percent rate increase ordered by the State Board for Property and Casualty Rates in September.

Three Senators who have argued for a rate cut in recent months -- Bruce Price, Brad Henry and Penny Williams -- explained the Senate lawsuit.

"We're doing this on behalf of Oklahoma businesses because we don't think they got a fair shake in the rate process. Everyone involved in the hearing seemed bent on giving the insurance industry what it wanted, instead of approaching the question in a fair and impartial manner. All we're seeking is a level playing field for business," said Senator Price.

The appeal seeks a rehearing on grounds that the state regulatory board refused to allow the Senate to intervene and present evidence important to the resolution of the rate case.

At the September 28th rate hearing, the Senate attempted to enter an actuarial report documenting the need for a 2.7 percent rate cut, but the board voted not to consider the evidence. Instead, board members examined only actuarial reports that advocated rate increases and voted accordingly.

"We don't think the board looked at all the evidence. If it had, it surely would have ordered a rate reduction. It doesn't make sense for someone who is supposed to be an impartial regulator to discard an important piece of evidence like an actuarial report, especially when that decision is going to cost businesses millions of dollars," said Senator Henry.

The difference between the Senate-recommended 2.7 percent reduction and the board-ordered 5 percent rate hike is approximately $24 million in increased costs for Oklahoma businesses.

"I know the insurance industry is trying to downplay the significance of the rate hike, but $24 million is a lot of money, especially if you're a small business person. This is going to be a significant and unnecessary hit on the Oklahoma economy if it is not overturned. While I support consideration of additional comp reforms, I'm not for raising rates unnecessarily," said Senator Williams.

The order handed down by the State Board for Property and Casualty Rates was the first rate increase since 1992. The action also broke a string of four consecutive rate cuts for Oklahoma businesses.

Experts had attributed those reductions to five major worker compensation reform packages approved by state legislators during the 1990's. They also predicted the comp savings would increase the longer the reforms were in effect, but that didn't stop the insurance industry and its supporters from requesting a major rate hike this year.

"I think a lot of political pressure was placed on the board to give the insurance industry a hefty rate hike, whether the evidence merited it or not. Unfortunately and unnecessarily, businesses got caught in the middle. We don't think they should be the casualties of a political game," said Senator Price.