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Workers comp managers say privatization is beneficial

BISMARCK -- West Virginia and Nevada officials told North Dakota legislators Thursday how they moved workers' compensation coverage from state-run monopolies to private companies competing in the marketplace.

In both states, the transition was prompted by financial crises.

And in both states, the officials described the new systems as successful. Employers can buy workers compensation coverage from any insurance company that wants to be licensed to do business in those states. Workers compensation benefits are still set by the legislatures of West Virginia and Nevada and must be offered by insurance providers that write workers compensation coverage in those states. Service has improved remarkably in both states, the officials said.

Rep. Rick Berg, R-Fargo, wants lawmakers here to study whether North Dakota's workers' compensation agency, Workforce Safety and Insurance, should be privatized. Berg is chairman of the interim Industry, Business and Labor Committee, which met and heard from the other two states Thursday at the Capitol.

The legislators took no action and will continue discussing workers compensation issues at a future meeting.

North Dakota is now one of only four states that still have a state-run monopoly agency providing workers' compensation coverage. The others are Washington, Ohio and Wyoming. Ohio's system has been racked by corruption scandals. In Washington state, the employees are taxed, as well as their employers paying premiums.

One critic of privatizing at Thursday's meeting was Rep. Steve Zaiser, D-Fargo. Zaiser and other Democrats have been strong critics of WSI, but on Thursday he defended the status quo.

He said the committee is "steering the path in one direction," toward privatization, and wants to hear a presentation from Washington state at a future meeting. Berg said he doesn't know if they'd learn much useful from the states that operate like North Dakota.

West Virginia passed wholesale change when its state fund was saddled with a $3.1 billion unfunded liability and had 26,000 claim decisions protested in one year. The average lag time for employers or their workers to report an injury was 41 days.

"This was a system that was truly broken," said Bill Kenny, Deputy Insurance Commissioner in West Virginia.

West Virginia began phasing out its fund in 2006 with the switch final 12 days ago. The remnant is a mutual insurance company called Brickstreet.

Nevada changed to a private company in several steps over the course of 24 years, beginning in the 1980s and ending last year, with each step being prompted by crises or problems. In1992 it had a $2.2 billion unfunded liability, said Douglas Dirks, now CEO of the successor company, Employers Holdings Inc.

Janell Cole works for Forum Communications Co., which owns The Dickinson Press.