Workers Comp Election Cycle Effect – Maybe, Maybe Not
I am asked many times every two years about the election cycle effect – Do the Elections affect Workers Comp? My short answer comes from previous articles on the subject. The question can be answered in short form – State Elections are critical to Workers Comp. The election cycle effect from state elections has considerably more importance than the Federal.
Ever since the Nixon Administration, this hybrid line of insurance proved that it should not be nationalized/federalized.
I then thought that covering who affects Workers Comp the most would provide a better answer. Workers Compensation remains one of the most structured casualty insurances written today.
Let us look at the structure that oversees each state’s Workers Comp insurance program. Each state may be different. I am writing as an overall generalist. The below influencers are not listed in order of importance. Two were bolded due to their level of importance.
- Governor
- State Legislature
- State Department of Labor
- Insurance Commissioner
- Industrial Commission
- State Rating Bureau or NCCI
- Court of Appeals/State Supreme Court
Structural Components -Little Election Cycle Effect
There exist too many components on every claim to list them all. These components change little from year to year and usually do not depend on any election cycle effect.
The one exception comes from a state deciding to completely overhaul its workers comp system. A few states do this every decade or two.
A few of the many critical areas that result from the State Statutes are:
- Compensation rate calculation – wage statements, minimums and maximum
- Period of WC payable – waiting period, retroactive date, limits
- Payment for permanent injury benefits – schedule of ratings
- Proper and timely form filing rules
- Claim resolution
- Litigated file rules
Litigated files – more than one defense or claimant attorney has told me that 95% of all workers comp litigated files settle before they reach a hearing. Why? With the structure in place when compared to general or auto liability, settlements contain a built-in structure.
Bottom Line
The Federal election cycle effect indirectly influences each state’s Workers Compensation system. The state elections more directly affect Workers Comp. A very detailed structure exists for each state. Workers Comp federalization may never occur even with each election cycle.
