Is North Dakota Headed Towards A Commercial Insurance Market?
North Dakota may soon turn into a mutual Workers Comp Insurance company such as Nevada did with Employers Holdings Inc., and West Virginia did with Brickstreet.
Both of those companies are having somewhat of a success in being a private insurance carrier, and they both have a full market with West Virginia opening their market July 1, 2008.
North Dakota lawmakers will explore the potential for converting the state’s monopoly workers compensation insurer into a competitive mutual insurer.
A North Dakota legislative committee is scheduled July 10 to hear from insurers in West Virginia and Nevada, where state workers compensation insurers have converted to private insurers. North Dakota Workforce Safety & Insurance is now the only insurer allowed to provide workers comp coverage in the state. If lawmakers press ahead with legislation, other workers comp insurers would be allowed to operate in the state.
The most fair way to price Workers Compensation insurance is with a free and open market. Time and time again, removing the government from an operation almost always makes the economy for that product or service become more profitable, and provides a higher level of service. A recent example is the removal of tobacco subsidies by the federal government.
I applaud North Dakota for their efforts, just as I have for the tremendous effort by the West Virginia Department of Insurance.
Update 6/27/2017 – This situation never occurred with WSI. The state still remains monopolistic. The oil boom over the last 7 – 8 years affected the decision to change to an open market system. Nevada and West Virginia employers now enjoy much-reduced workers compensation rates.
Hopefully, North Dakota will reconsider going to a private market soon.
Workers Comp Coverage Opportunity
The state of North Dakota is one of the last bastions in old school work comp insurance.
As I have said in many previous posts, a monopolistic Workers Comp carrier is not the best choice for a Workers Comp system in any state. North Dakota seems to have agreed to keep their current government-run monopolistic carrier.
Officials from Nevada and West Virginia say that taking their state’s workers` compensation operations private has helped lower insurance rates and provide better service, but the officials say the moves were prompted by severe money problems. The Peace Garden state’s Workers Compensation system is financially healthy.
State legislators say there may not be much support for taking it private. Right now, businesses that must have workers` compensation coverage have to buy it from North Dakotas Workforce Safety and Insurance agency.
While North Dakota may be solvent and healthy, that may be at the expense of businesses paying out more Workers Comp premiums than in an open market such as Nevada or West Virginia have begun in the last few years/months.
Update – Both Nevada and West Virginia have reduced their advisory loss costs many times over the last ten years. The voluntary market carriers have provided a much healthier WC environment.
Update – as of 2018, the Roughrider State provides Workers Compensation coverage for employers through its monopolistic state fund – WSI.
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