Lawmakers’ actions will cause lower worker’s comp insurance costs
Posted on Wednesday, April 30, 2008
URL: http://www.nwanews.com/hl/Editorial/24302/
Rates for workers ’ compensation insurance paid by Arkansas employers will go down as of July 1, in large part owing to reforms passed by the legislature.
The state Insurance Commissioner also credited high workplace standards and aggressive health and safety programs for the scheduled 12. 8 percent drop in workers ’ comp premiums.
The legislature approved Act 796 in 1993, in response to continuous doubledigit increases in the cost of workers ’ comp insurance.
According to a report by the state Insurance Department, without the changes incorporated in Act 796 the voluntary market for workers ’ comp could have disappeared in Arkansas because it was becoming too expensive.
After passage of Act 796 the market immediately stabilized.
Since 1995 rates have gone down by about 52 percent, saving Arkansas businesses millions of dollars, according to the Insurance Commissioner.
In addition to the benefits resulting from cost savings for Arkansas companies, the lower workers ’ comp rates have been an effective tool in recruiting industries interested in locating in the state.
The steady decline in workers ’ comp rates have coincided with an increase in the volume of insurance being sold in Arkansas.
That indicates a steady increase in employment and wages.
An important provision of Act 796 was creation of a Fraud Investigation Division, which has since been renamed the Criminal Investigations Division of the Insurance Department.
According to the department, before passage of Act 796 in 1993 fraud in the workers ’ comp system was perceived to be epidemic.
Yet there had never been a criminal prosecution for fraud committed by employees, employers or health care providers.
One reason was that the cases are complex and can be difficult to prove, therefore local prosecutors were reluctant to file criminal charges because of the uncertainty of getting a conviction.
Any reduction of the Criminal Investigations Division’s powers or resources would likely result in an increase in the frequency and severity of fraud, according to the 2007 report by the Insurance Department.
The legislature significantly improved the effectiveness of the Criminal Investigations Division when it approved Act 743 in 2001.
That act grants law enforcement authority to the Insurance Department’s fraud investigators, for example by giving them powers to execute arrest warrants.
The number of workers’ comp fraud cases has gone down in the past few years because increased enforcement has been an effective deterrent. From 1993, when the fraud unit was formed, until 2006 there have been 131 cases resulting in 101 convictions, three acquittals and 27 cases in which the charges were dropped. After a five-year investigation, one corporation was convicted of failing to obtain workers’ comp for its employees. That was a first in Arkansas history. If you have any questions or comments about legislative issues, please contact me at HendrenK @ arkleg. state. ar. us or call me at (479 ) 787-6500, extension 30.
Kim Hendren is an Arkansas state senator representing the 9 th District (Benton County ).