Oklahoma Agents Group Pleased with Progress of State Legislation
Oklahoma’s independent insurance agent association says measures of interest to the group are moving so quickly in the state Legislature this year it is cancelling an annual event furing which member speak with lawmakers on legislative issues.
The Independent Insurance Agents of Oklahoma says it has been following three primary issues: (1) overhaul of the workers’ compensation system (SB1062), (2) mutualization of CompSource Oklahoma, (HB2201), and (3) legislation that brings transparency to Interlocal agreements that allow for covering government entities under trust arrangements (SB692).
The IIAO reports in an emailed message to members that all of these bills will likely have moved through the legislative process by the date originally scheduled for IIAO Day at the Capitol – May 8.
The IIAO offered the following review of the three issues:
SB1062 – On April, this bill passed the House by a vote of 74-24 and is very likely to easily pass the Senate and be signed by the Governor. This bill will bring dramatic reforms to our outdated workers’ compensation system.
Under the most controversial provisions of the bill, the optional coverage, IIAO was successful in having the items of greatest concern addressed in this bill. Those were: the insistence that there be Guaranty Fund protection for insured and self-insured programs; no provisions that would allow these products to be sold through associations; exclusive remedy provisions; and limited hold harmless provisions for agents who sell the optional coverage.
As scored by NCCI, the reforms in the current system will bring savings of $260 million!
HB2201 – While there is still some work to do, much progress has been made toward privatizing the state’s workers’ compensation facility, CompSource Oklahoma (CSO).
A task force on which IIAO President and CEO Dan Ramsey participated concluded that CSO should be mutualized. While HB2201 does not make it a mutual company in a pure sense, it does make dramatic changes.
It will bring CompSource under the same rules as all other companies operating in Oklahoma, including form and rate regulation after a three-year transition period; payment of assessments to the Property & Casualty Guaranty Association as required by other carriers; strips CSO of its preferential treatment in providing workers compensation to state agencies; brings consumer protections by holding CSO accountable to the Oklahoma Insurance Department for market conduct issues and subject to the Unfair Claims Settlement Practices Act; requires CSO to pay all licenses, fees, and state taxes as required by other carriers; allows CSO to continue to serve as the market of last resort; and restricts the formation of subsidiaries to be limited to the same lines of insurance to which CSO is limited.
If the bill passes and is signed into law, there is likely to be a challenge as to whether or not the surplus is owned by the state of Oklahoma or the policyholders. If so, this matter will be decided by the Oklahoma Supreme Court.
SB692 – The Interlocal Cooperation Act will bring greater transparency to trusts that have been created to provide insurance coverage for governmental entities.
There is great concern about the financial condition of several of these trusts, but current law does not require them to be accountable. This bill will require the trusts to provide audited annual financial reports to the Oklahoma Insurance Commissioner and will require the audits be prepared in accordance with generally accepted accounting procedures.
An Emergency Clause has been added to assure this information is provided in time for school districts to review the financial condition of these trusts prior to making decisions on policies renewing July 1, 2013. We are also hopeful that an interim study will be conducted to further investigate the financial condition of these trusts.
This bill has easily passed both the House and Senate, but needs to have the latest amendments accepted in the Senate and passed on to the Governor.
Source: Independent Insurance Agents of Oklahoma