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Risk Insider: Bill Minick
Oklahoma Option Goes Live
Bill Minick is an attorney, risk management adviser, and EVP at OccMD, based in Dallas. He can be reached at [email protected].
The Oklahoma Insurance Department has issued the first Qualified Employer Certificates under the Oklahoma Option to workers’ compensation. Two of these “Qualified Employers” are small companies and one is a large, national employer. All of these approved applications are for programs effective on or before July 1, 2014. Many other Qualified Employer applications are now in process.
Insurance Market Status
Three insurance carriers have been formally approved and are quoting Oklahoma Option business. The two leading carriers are Great American Security Insurance Company and Safety National Casualty Corporation. Several more insurance companies are in the midst of product development. Dozens of Option insurance applications have been submitted for quotes, competition for business is growing, and early quotes reflect significant discounts off both expiring and renewal rates for workers’ compensation insurance.
These insurance carriers (who also participate in the Texas nonsubscriber market) recognize in their underwriting the power of more employee accountability and medical management control. Knowledgeable insurance agents are getting quotes for both workers’ compensation and Option insurance coverage on every upcoming renewal to best serve their clients and protect their business.
Regulatory Status
The Oklahoma Insurance Department has deliberately moved forward and made great progress in creating the new regulatory infrastructure for the Oklahoma Option. In addition to reviewing and approving applications for “Qualified Employer” status, the Department is working to finalize financial safe harbor rules, establish the guaranty funds required by statute, and address other matters important to the long-term stability and competitiveness of the Oklahoma occupational injury marketplace.
Option Outlook
Employer and insurance agent interest in the Option is high and growing, backed by strong support from insurance agents, carriers, regulators, and legislative leaders. As expected with the development of a new model of occupational injury management, administrative and regulatory opportunities surface and are being addressed.
New products and services (including more efficient program design and implementation methods for employers with low Oklahoma claims activity) are moving from conception to the street. Employers and their insurance agents should work with advisors who are knowledgeable about intricate details of how the Option really works.
The Bottom Line for Employees and Employers
The Oklahoma Option is different from Texas nonsubscription by requiring various financial security controls (such as payment of a minimum level of benefits and guaranty funds), coupled with the “exclusive remedy” (eliminating the Texas negligence liability claim risk).
However, the Oklahoma and Texas systems both reflect the same inverse relationship between the extent of mandated benefits and the extent of employer liability exposure. And both systems rely upon the same math … a simple formula of:
Employee Accountability + Medical Management Control =
Better Medical Outcomes + Higher Employee Satisfaction =
Employer Savings + Job Growth.
Billions of dollars have been saved through Texas nonsubscription, and hundreds of millions of dollars will likely be saved by employers in Oklahoma over the next few years.
