OK Gets Exciting

Since I've been in workers' compensation the tension between employer and employee has increased - but neither stakeholder has felt satisfied that the system of workers' compensation has provided the promises advertised by politicians, nor the value expected for the money invested.

Though Texas has always made participation in workers' compensation voluntary, there was no optional equivalent available.

Oklahoma is the first state in the nation to provide an optional system whereby the protection of employees is not tied to the workers' compensation system.

Many other states have optional workers' compensation provisions within their systems - such as union approved "carve out" alternatives - but those all still revert to the basic work comp system as a back stop.

The Oklahoma option is different. Though opt-out employers in Oklahoma must still meet minimum standards that at least match the provision of benefits under the work comp system, employers are provided much greater freedom of choice and control.

A couple of days ago I reviewed the financial intermediary characteristics of workers' compensation insurance and why claims are such a huge focus.

Claims are the bane of employers. Most employers in my experience don't mind paying for insurance to cover their employees (yes, there are some exceptions - some ruthless business owners who have no regard for the safety and welfare of their workers, but they are fortunately a rare exception).

What drives employers crazy is paying for an expensive product (insurance) and then having absolutely no control over what happens when they need to call upon that product to provide what is guaranteed on paper.

The lack of control over the product purchased disintegrates the perceived value. Sure, a claim is "covered" but only if another person says it's covered, and sometimes maybe it shouldn't be covered but someone else says it is ... etc.

The opt out plan in Oklahoma seeks to change that equation. The provisions of the law are intended to return much of the control over claims back to the ultimate payer - the employer - and that has people excited.

There are now three (with a fourth soon) insurance companies providing insurance that meets the minimum standards of the Oklahoma opt out plan, and from what is being reported, employer appetite for these policies is strong.

Tom Hebson, vice president of development and government relations, business development, for Safety National which was the second carrier to get approval for their optional coverage, told WorkCompCentral that he believes this is a trend that will traverse more state lines.

“That’s kind of the intention,” he said, “to streamline the work comp system a little bit. This does a lot of that for the system. It’s a good alternative.

“I mean, work comp’s great – it’s a great mechanism, and we believe in work comp. It’s just we also know that options are going to be out there, and … we felt we should be a leader of (providing alternatives).”

This is a very exciting time in the evolution of workers' compensation. We have a system that is over 100 years old and has been morphing, particularly in the last 20 years, to cope with changes in work and the economy, and many feel those changes have been negative.

The Oklahoma experiment is bold. Whether it is the beginning of a trend remains to be seen - but it is clear that the early sentiment reflects a sizable appetite for something new.