Worker comp agency set for privatization

Monday, Dec. 20, 1999 | 11:40 a.m.

CARSON CITY -- Employers Insurance Co. of Nevada estimates it lost 4,000 business accounts to its rivals in the first six months of open competition.

When competition started July 1, there were 44,000 businesses insured by the state agency and now the number has dwindled to 36,000.

That's partly because Employers Insurance stopped renewing small and unprofitable businesses. That action was in keeping with the company's future; after 86 years as a state agency, it will become a private company Jan. 1.

While privatization of the agency has been in the works for some time, Gov. Kenny Guinn made it official Friday when he signed the proclamation that officially makes the workers compensation system a private mutual insurance company.

"With this action, we've relieved the state of Nevada of a $1.6 billion liability and created a financially sound corporation," Guinn said.

The company, which was once near insolvency, was able to sell off its $1.6 billion debt to other private interests.

Douglas Dirks, general manager of the company whose new acronym is EICON, said there will be a surplus of $300 million as of Jan. 1. He also said EICON has slimmed its workforce from about 900 to 550. And it still retains ownership of JHC Health Center in Las Vegas, which was used as a rehabilitation facility for workers on the job. It has expanded its role to stress healthy practices.

Dirks said an advisory committee he created drew up a set of bylaws to govern the company.

Guinn named eight people to the first board of directors.

Those from Las Vegas are Bob Kolesar, of the law firm of Kolesar & Leatham; Kathy Ong, of Hobbs & Ong, a financial consulting company; and Michael Rumbolz, of Anchor Gaming.

Other board members are Phil Peckman of the Greenspun Corp. in Henderson; Dr. Richard Blakey of Reno Orthopaedic Clinic; Bruce Herzog, of Q&D Construction, Reno, and Sharon Zadra, a Reno advertising and public relations executive. Also, Sam Routson, an executive in a major potato farm in Winnemucca, was appointed.

They have staggered terms. The terms of Peckman, Routson and Zadra expire in March 2001. The terms of Blakey, Herzog and Kolesar expire in 2002. And the terms of Ong and Rumbolz expire in 2003. Upon the term expirations, the policy holders will elect replacements.

In related news, State Insurance Commissioner Alice Molasky-Arman is expected to issue her decision this week whether to boost premiums across the board to all employers by 6.4 percent.

The National Council on Compensation Insurance Inc., which is advising Molasky-Arman, said the higher rates are needed to finance increased benefits for injured workers, ordered by the 1999 Legislature.

In the early 1990s, EICON, which was then called the State Industrial Insurance System, was in poor financial shape with more money being paid out than being collected from policy holders. Gov. Bob Miller took control of the system and with the Legislature made major changes, bringing it back to financial stability.