West Virginia Workers Comp Was Subsidized
Was West Virginia Workers Comp Carrier Brickstreet subsidized by taxpayers? I was reading a Opinion Letter in the Charleston Daily Mail about Workers Comp being subsidized for governmental entities in WV. I had to disagree with the letter as the author inferred that WV governmental entities were being subsidized as Brickstreet had been writing them at a loss since 2006.
Insurance carriers will quite often write a section of a market and not just cherry-pick the safest employers with the classification codes in that marketplace. Brickstreet’s whole book of business allowed for a large profit as they were able to pay their very low interest loan back to the state government much earlier than anticipated.
Do the safer governmental entities or businesses ever actually subsidize the less safe ones? I would say no as that is the function of the Experience Modification System. The E-Mod system penalizes the unsafe insureds. The E-Mod system allows a discount of sorts to the safer insureds. One of the benefits of WV switching from their State Fund system to the NCCI system was a more accurate E-Mod system.
Brickstreet had said in a press release that the rates for some of the governmental entities were being artificially suppressed causing a loss of $25 million for writing governmental entities. However, as we have seen very often in the marketplace, carries such as AIG and Travelers are writing the same business that Brickstreet wrote in the past priced at Brickstreet’s previous policy year without increases.
It will be interesting to see what policies have been written by which carriers and at what price for governmental entities. I think that you will see incredibly low pricing by the big carriers where there will be no subsidizing in the general marketplace.
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