Wednesday, April 15, 1998 | 10:06 a.m.
CARSON CITY - The state system that sells industrial insurance policies to Nevada employers for their workers launched an effort Wednesday to keep as much of its business as possible once competition starts in mid-1999.
State Industrial Insurance System chief Doug Dirks, flanked by his new chief marketing officer, George Lonas, described a batch of changes within SIIS to help hold down an exodus of clients to private insurers.
The changes include stepped-up training for SIIS employees, computer upgrades, a new phone system linked to a claim database and other improvements.
SIIS also will probably get a new name as part of its image make-over, and has reduced its rates by an average 22 percent.
SIIS now provides policies to about 46,000 Nevada businesses and collects premiums of about $470 million a year. But the client total could be cut by half or even two-thirds over the next several years depending on how successful the private insurers are, Dirks said.
Since SIIS and the private insurers must all charge the same rates at first, Dirks and Lonas said they'll stress the idea that SIIS can provide the best service.
SIIS should have an edge because it has a Nevada-based operation with 945 employees stationed at various locations throughout the state, while the new competitors will mostly be based outside the state, Dirks added.
SIIS also will have to cut employees as it loses business to the competition - but Dirks said he could lose many workers anyway due to "raiding" by the competition to build up their Nevada operations.
SIIS also must silence critics who point to financial problems it had over the years, but Dirks said a 1997 legislative change that split its old and new claims, assets and liabilities will help in that regard.
The old, pre-1995 financial sheet shows an unfunded liability of about $1.65 billion and assets of about $650 million. But with modest investment growth, Dirks said the assets should grow enough to cover that liability over time.
The new financial sheet shows liabilities from July 1995 that total about $883 million and assets of more than $1 billion. That means a surplus that was about $200 million last July and now stands at an unaudited $250 million, Dirks said.
Given that balance sheet, Lonas said there's no way SIIS can be seen as "the market of last resort."
Sixty-four insurance companies already have applied to sell workers' compensation coverage beginning in July 1999. The competition was authorized by the 1997 Legislature.
Business lobbyists had long wanted to change the law to bring more competition into the workers' compensation market.
While all companies initially will charge the same rates, price controls will gradually be removed. In 2003, the companies can charge what they choose.
Major insurance companies such as Farmers, Travelers, Liberty Mutual, and National Union are expected to dominate the market.
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