Saying this week's reduction in workers comp rates is the beginning of a trend, the leader of the Oklahoma Senate is predicting continued cuts in the future. The State Board for Property and Casualty Rates implemented a 10 percent reduction yesterday on the heels of approving a 4.5 percent cut last year.
"We've seen back to back rate cuts for the first time in recent history and the trend indicates the reductions will not only continue, but will be even larger in years to come. I wouldn't be surprised to see a rate cut of at least 20 percent the next time the board meets," said Senator Stratton Taylor, President Pro Tempore of the Oklahoma Senate.
"In the meantime, we'll be exploring any additional reforms that might help escalate the rate reductions. Anything that reduces the costs to business and protects the injured worker should be examined."
Senate leaders have aggressively pursued rate cuts the past two years, filing documentation with the casualty board supporting large reductions in comp rates and even threatening an investigation at one point when it appeared the board might be stonewalling on a rate case last year.
"It's important for someone to keep a close eye on the rate-making process. We just want to make sure the board continues to look at all the evidence in the comp market and sets rates accordingly. I think there should be a watchdog and we've been happy to play that role the past two years," noted Senator Taylor.
Independent actuaries who have evaluated the workers comp market in Oklahoma have testified that reforms approved by the Legislature in 1992, '93 and '94 are having an increasing impact on comp costs.
The Senate leader cited statistics from the National Council on Compensation Insurance, recently reproduced in a State Chamber of Commerce publication, showing that comp losses have decreased drastically in the past 5 years. According to NCCI, losses incurred in 1991 were $266 million, but by 1995 they had dropped to $147 million. Earned premiums, however, have not mirrored the loss declines, falling from $263 million in '91 to $256 million in '95.
"The numbers compiled by the insurance companies themselves indicate there should be more cuts in the future. What we're witnessing is a snowball effect of sorts where the longer the reforms are in effect, the greater the impact they have on the market. When we passed the reform packages, the experts warned us not to expect overnight results. Our patience and perseverance are paying off and will continue to pay off in the future," said Senator Taylor.
"That doesn't mean we won't explore additional reforms, however."