West Virginia’s Privatized Workers Comp Insurance System Turns One

It’s been a year since the privatization of West Virginia’s workers compensation system was fully completed, and Insurance Journal reports on the many successes thus far with the initiative:

West Virginia Insurance Commissioner Jane L. Cline says her state’s one-year old privatized workers’ compensation system is offering better claims administration, lower costs for employers and better treatment of injured workers.

In 2005, the state approved the privatization of the state fund, which had been the sole workers’ compensation provider. The new private carrier, BrickStreet Mutual Insurance Co., opened its doors on Jan. 1, 2006, and it remained the sole provider until the market opened for competition on July 1, 2008.

During the transition, Cline’s office assumed the role of administrator of the claims of the state’s old fund that occurred before July 1, 2005. Cline says that the old fund was “saturated with fraud by providers, employers and employees.”

Since the switch, Cline says that claims handling has improved such that:

ââ?¬¢ claim protests have fallen 68 percent
ââ?¬¢ the overall appeals process has been streamlined resulting in claims disputes being resolved in a shorter period of time
ââ?¬¢ claimants have received better claim management by claims adjusters having fewer claims to manage, and
ââ?¬¢ the unfunded liability on “old fund” claims has dropped from $3.1 billion to $1.5 billion.

The open workers’ compensation market, which celebrated its first anniversary July 1, is also performing well, according to Cline. As of June 30, 2009:

ââ?¬¢ Overall premiums have dropped 30.3 percent, or more than $150 million
ââ?¬¢ 198 different workers’ compensation insurance companies have filed rates and forms
ââ?¬¢ Of those 198 companies, 154 have active workers compensation policies in the voluntary market.
ââ?¬¢ There are 120 policies in the residual market representing premium of about $1.9 million
ââ?¬¢ More than 90 percent of all claims are ruled upon within the first 30 days

See my August 2008 blog post for last year’s update.

Ã?” Reason’s Privatization Research and Commentary