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Wyoming Workers Comp State Fund Huge Surplus – An Analysis

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Wyoming Workers Comp State Fund Banking Funds

While we are on the topic of State Fund, Wyoming  Workers Comp State Fund has been in quite a few online Workers Compensation publications with their huge surplus. Basically, the two basic questions that are being asked are:

Vector Graphic of Bank Wyoming Workers Comp State Fund With Dollar Sign
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  • What do they do with the surplus?
  • How did Wyoming get to have such a surplus?

The Wyoming surplus issue is complicated. We will address the first bullet point today and cover the second one in the next blog post.

It is, and has been, our opinion that any surplus that involves a Workers Comp Fund surplus should be returned to the employers. The surplus clearly indicates that Wyoming has been overcharging their employers for years. Refunding the Workers Comp premiums pro-rata should be the way to go. If the surplus was very small then, the State Fund of Wyoming should retain it to pay claims. I understand the surplus to be $925,000,000. That is not a small surplus for Wyoming. One may equate the return of premiums as a business stimulus. We would have to look at the numbers to see the amount of the surplus that should be returned to the employers.

Hand Gesture State Fund Graph Arrow Up
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One article that I read indicated that the injured employees were the ones that were shortchanged. I would have to disagree with that totally as there has never been a study conducted anywhere at any time that indicated that underpaying employees caused a surplus in a State Fund’s premium. If the employee benefits were to increase that would affect only the FUTURE premiums, not the current and past ones.

One area that seems to have arisen in North Dakota with no conclusions drawn there is that too many claims were denied, and that increased the surplus. I will write a blog on that in the following post about the process of a litigated Workers Comp claim in a monopolistic state such as Wyoming or North Dakota. Could the claims process in a monopolistic Workers Compensation state be unfair? Possibly.

Wyoming Claims Handling An Issue

One of the areas that Wyoming Workers Compensation System will need to examine is how Workers Comp claims are handled – specifically if claims that should be accepted are instead denied.

This is one of the lingering questions about the North Dakota Workers Compensation system. Is there a trend to over-deny claims as the adjusters

Mountain Graphic Inside of Wyoming Workers Comp State Fund
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in North Dakota and Wyoming know that the Workers Comp system is one-sided?

A high-quality full claims audit from an outside source would enable Wyoming to find out if they are being fair to their injured employees. The word “independent” is crucial. The audit would have to be superior to the one in North Dakota.

From the Casper Star-Tribune:

  • A recent assessment of workers comp’s finances by Pacific Actuarial Consulting suggested that about $642 million is required to cover benefits and liabilities based on historic and current income and payouts. It also suggested a more conservative view may call for $848.7 million, which would cover a major catastrophic scenario.
  • As of Jan. 31, workers comp’s cash balance was $925,296,141, according to outgoing director Gary Child. So whether the surplus is in the neighborhood of $77 million or $283 million, advocates from both the employee and employer viewpoints say they want a more detailed analysis of the finances.
Picture Woman with Credit Card and Cash Workers Compensation System Wyoming
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I do not ever, and will never accept, an analysis from anyone in an insurance position that uses the word or words “worst-case scenario”. Therefore, the analysis by Pacific Actuarial Consulting that 848.7 is needed for a catastrophe is not valid. However, I have not reviewed their findings. The $642 million seems high but is probably more in line with the actual needs of the Wyoming Workers’ Compensation System. Producing an LDF (Loss Development Factor) should be sufficient for the projected needs.

One of the great things about the Wyoming Workers Compensation system is that attorneys, legislators, administrators, and others are asking questions.

Next Up – The Difference Between Premium and Reserve Audits – they are very different.

Next Up – Analyzing the Amount of the Surplus that should be returned.

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Table of Contents

James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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