An internal audit by the State of Washingtons Workers Compensation Department of Labor and Industry (L&I) may be the start of another Workers Comp system converting from a monopolistic system to a private system. West Virginia recently converted their state-run system into a free market.
Washington’s L&I issued an immediate press releases indicating that their monopolistic system was doing fine. There was a large draw on the contingency reserve which according to the L&I was a normal course of business that has occurred numerous times in L&I’s history.
Regardless of the type of Workers Compensation, a very low contingency reserve will cause the respective state’s Department of Insurance to immediately put the insurance company into receivership or at least into a probationary watch period. The Insurance Commissioner will not allow a carrier with inadequate contingency reserves to write any more coverage.
Many states have converted from a Monopolistic State Fund to a fully private WC system and market. States such as West Virginia have shown that private systems work better.
I will review the auditor’s report and post my opinion next time.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.