Workers comp changes spur lawmakers’ concerns

Wednesday, Jan. 22, 1997 | 11:59 a.m.

CARSON CITY -- It won't be rosy for all Nevada employers when private insurance companies compete to write workers' compensation coverage in July 1999.

Some of the 45,000 firms covered now by the State Industrial Insurance System will be facing higher premiums. And some will be thrown into a high-risk pool for companies with poor safety records.

At present SIIS must provide coverage to every company. But when competition from private insurers arrives, SIIS will be able to pick and choose which employers it wants to cover.

Many employers believe they will be able to get better coverage at less cost from private insurers than they do now with SIIS.

It's too early to know the numbers and how much higher rates high-risk employers will face, but it will be painful, said Douglas Dirks, general manager of SIIS.

"My concern is for the small business," Dirks said.

He said this is a market that SIIS will concentrate on. Big insurance companies are looking to cover the larger employers, he said.

Dirks said 35,000 employers of the 45,000 enrolled in SIIS pay less than $1,000 a year in premiums. The 1,000 largest accounts pay $200 million a year to SIIS for coverage of the injured worker.

Dirks' comments were made to the Senate Commerce and Labor Committee. SIIS, which was near insolvency in 1992 with $2.2 billion in debt, has cut that to $1.3 billion and may reduce it to $1 billion or lower by this coming July, he said.

He painted a picture of a system with less debt, more net income, better service and improved automated operating procedures.

But Sen. Ray Shaffer, D-North Las Vegas, said the people in his district feel "the improvements have been made on the back of the injured worker ... they are not treated properly ... they are denied access," to medical treatment.

Sen. Dean Rhoads, R-Tuscarora, asked Dirks when a surcharge might have to be imposed to erase the long-term debt.

Dirks said any talk of a surcharge on employers is premature while the system is improving. But if the picture changes, Dirks said, the surcharge on all employers might have to be considered.

The base rates for SIIS and private insurance companies will be set by state Insurance Commissioner Alice Molasky. These rates will be the floor and no insurer can undercut them, she said.

That's to prevent companies from offering big discounts to lure customers in 1999 and then going bankrupt. Companies writing workers compensation insurance will have to put up a minimum security deposit of $100,000 plus a percentage of the total premium business. That's to take care of paying the claims of insured workers if the company defaults.