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Washingtons Workers Comp Monopolistic System – Next To Fail?

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Washingtons Workers Comp System

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.

Picture of FIO Monopolistic Washingtons Workers Comp System
Wikimedia Commons – Architect of the Capitol

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. 

One bellwether mentioned in different auditors’ and regulators’ reports hovers at a 15% reserve level.  Alarm bells sound when a carrier reaches this number or less.  

Many states have converted from a Monopolistic State Fund to a fully private WC system and market.   States such as West Virginia and Nevada have shown that private systems work better.

I will review the auditor’s report and post my opinion next time.

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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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