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Many State Run Workers Compensation Programs Have Faced Problems


Problems Faced By State Run Workers Compensation Systems

The problems experienced by state run workers compensation systems have increased lately.

Man Experience State Run Workers Compensation Problem Using Laptop And Diagram At Back
(c) StockUnlimited

There are many challenges that are faced by state-run Workers Compensation programs.

The ones that are most prevalent as of now are:

  • Solvency – Many state funds have had to have larger injections of cash from their respective state legislatures to survive
  • Fraud
  • Mismanagement
  • Have To Take All Applicants – the funds have no right of refusal
  • Lack of Accountability – See BWC Ohio for an example of a monopolistic state workers comp system with no accountability.  I have written many articles on the BWC in this area.
  • Not Using Good Business Models
  • No Competitive Forces – Competition tends to make a company operate at a higher level of efficiency
  • No Profit Motive – Without a profit motive, the bullet point above on solvency becomes more apparent
  • Customer Service Issues
  • Deficient Claims Handling Service – the lack of customer service goes hand-in-hand with less than desirable claim handling.

There are states that have converted or are now in the process of converting their state run Workers Compensation systems to privatized systems. Nevada has been successful and West Virginia is in the process with Governor Manchin taking the lead to push the system from the State Fund of Brickstreet(c) to an open market as of 07/o1/08. The West Virginia Insurance Commissioner Janet Cline has taken a tiger by the tail and has tamed it for the most part.

California’s State Fund (SCIF) was a quasi-state run system as they held an extremely high percentage of the Workers Comp insurance market for many years. Their new Insurance Commissioner Pozner is in the process of cleaning up SCIF.

Up Next – What is the main reason for the problems that State-run Workers Comp programs are experiencing?

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management 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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