• Letter from the AGC President: Workers’ Comp Initiative
• Key Facts About the Initiative
• Issues to Consider
• News Feed
• Links
• Staff Contacts
• Webinar Information

By Tom Zamzow

As you know an initiative (I-1082) has been filed that would allow private carriers to sell workers’ comp insurance in Washington. This is a significant issue for the construction industry, and it is also a complex one. Even though the initiative seems straightforward enough – allowing private carriers to compete with the L&I – Washington State’s workers’ comp system is so unlike those in other states that it’s difficult to nail down an apples-to-apples comparison and get a handle on what it really means to our industry, our individual businesses and our association.

That is why the AGC Board decided to take a deliberate approach in analyzing the initiative. We’re seeking as much member input as possible before determining whether or not to throw the AGC’s considerable weight behind it. Here’s what has occurred so far:

• District meetings have been held in Bellingham, Seattle, Tacoma and Yakima for members to learn more about the initiative, ask questions and express their views.

• Many of AGC’s self-insured members met to discuss issues pertinent to their situations.

• Members have been encouraged to submit their views in writing, and many have done so.

• AGC’s Retro Committee and Government Affairs Council are reviewing the initiative and will make recommendations to the Board.

• With the help of private insurers – potential providers of workers’ comp insurance in the state – we provided a webinar shedding more light on what a three-way (private carriers, L&I and self-insured) system would look like.

• We’ve created this webpage where members can go to learn more about the initiative and provide comments. Notable elements of the website are a “Key Facts about I-1082” section and an “Issues to Consider” section that seeks to tally the economic, philosophical and political issues that have been raised by members during discussions of the initiative. We’ll update this site frequently as more information becomes available.

Good points have been made on both sides of the issue. Some members have expressed strong opinions, and there is universal concern about the efficiency and effectiveness of L&I’s management of the system (to say the least). But I believe the primary message we have heard at all of these meetings is, “We need more information.” Over the last several weeks we’ve worked hard to provide additional information. With regard to any position on the initiative, ultimately it will be a “gut” call. Some things – definitive premium costs, for example – are just not knowable. But I encourage you to arm yourself with information, and let us know what you think. Email your thoughts to AGC’s Government Affairs Director Rick Slunaker, or call him at 360-352-5000.

Update: On July 12 the AGC Government Affairs Council voted to recommend that the Board of Trustees endorse I-1082. On July 27, the AGC Retro Committee voted to recommend that the Board of Trustees remain neutral on I-1082. Click here to read the Retro Committee's letter to the Board. The AGC Board will meet on September 13 to consider these recommendations.

Ballot Title: Statement of Subject: Initiative Measure No. 1082 concerns industrial insurance.

Concise Description: This measure would authorize employers to purchase private industrial insurance beginning July 1, 2012; direct the Legislature to enact conforming legislation by March 1, 2012; and eliminate the worker-paid share of medical-benefit premiums. Allows private insurers to sell workers compensation insurance in Washington State.

• Private insurers will be regulated by the Office of the Insurance Commissioner. The Department of Labor and Industries will continue to exist but will have to compete with private insurers and self insured employers will continue to be regulated by the Department of Labor and Industries.
• Group insurance plans are allowed.
• The existing law that allows employers to deduct a portion of the workers’ pay for industrial insurance premiums is eliminated. This section of the initiative will take effect immediately.
• A joint legislative taskforce is established to develop proposed legislation to conform the current statutes to the provisions of the initiative. The recommendations need to be made by December, 2011.
• The Legislature must adopt supplemental legislation to fully implement the initiative by March 1, 2012.

The AGC Government Affairs Council was asked to conduct meetings throughout the Chapter to give AGC members the opportunity to discuss the Initiative and to gather input before deciding whether to take a position on the proposal. In these meetings, AGC members were asked to consider the philosophical (views competition versus monopoly in this area), economic (what would be the impacts to individual companies as well as to the AGC), and political (how would taking a position effect on our relationships and what would the degree of effort involved be) implications of taking a position on the proposal.

Many issues and questions have been brought up. These are some of the things to think about when considering a position on the initiative. If there are other issues or questions we should add to this list, contact Jerry VanderWood.

Philosophical

How will competition affect workers’ comp costs?

Inarguably, L&I is inefficient and difficult to deal with. Will private carriers be an improvement and spur L&I to improve service?

The initiative will not reform the system; it will allow private carriers to sell policies according to current rules, laws and court decisions. How does this affect premiums?

Economic

The basis for calculating industrial insurance premiums will be changed by the initiative to total payroll instead of hours worked, making Washington’s calculation method consistent with the other 49 states. What is the impact of this change?

Does your company do business in multiple states? What’s your workers’ comp experience and costs in other states compared to Washington?Under the initiative, employers would no longer be allowed to deduct the workers’ 50% portion of medical aid premiums. This change would be in effect for a year and a half before businesses would be allowed the option to purchase coverage from private insurers. Is this added cost justified in light of possible benefits in the long-term?

What would be the impact on AGC Group Retro and on AGC as a whole? The Initiative allows private insurers to offer group programs to organizations like AGC. Will there be realistic options for the AGC and its members with private insurers which have similar financial and safety benefits? Will the State Fund still offer similar options for employers electing to remain with it? What will be the impact in revenues from these options on the AGC?

Political

Allowing private insurers into the workers’ compensation market introduces a new dynamic into the legislative and regulatory activity addressing the program. Do we believe that insurers will effectively contribute to efforts to reform the underlying laws and court decisions?Will eliminating the worker medical aid premium payroll deduction lessen labor’s voice in governing the system?

Is the timing right, politically? Would it be better to pursue an initiative next year with more prep time, or does the current political climate make this the year for an anti-status quo initiative?

Passing an initiative like this will require a lot of “heavy lifting” and commitments from associations and individual businesses. Are we able to make those commitments?

What other “players” are involved? Who’s for it? Who’s against it?

Negotiations will be conducted this year with the basic crafts. Will the negotiations be impacted by the initiative campaign, and vice versa?

Proposed Bill a Relief Valve for Beleaguered Employers

Builders Seek WC Reform Through Ballot Initiative

A Hostile Takeover

Petition Seeks Private Insurers for Workers’ Comp

Broad Coalition to Oppose Initiative that Hurts Small Business, Workers

Save Our Jobs Coalition Delivers Signatures for Initiative Ending State's Monopoly on Workers' Compensation

Office of Financial Management’s Analysis of Impact of I-1082

What would I-1082 cost various businesses?

The pro and con websites are:

Save Our Jobs (Pro)

No on I-1082 (Con)

Please contact our staff members with any questions or comments you have.

• Rick Slunaker, Director of Government Affairs, 360.352.5000
• Lauren Gubbe, Director of Group Retro, 360.352.1632
• David D'Hondt, Executive Vice President, 206.284.0061

On June 8 around 100 representatives of at least 50 AGC member firms participated in a webinar discussing the impact of proposed Initiative 1082, which seeks to allow private insurance carriers to offer workers’ compensation insurance to Washington’s employers. The presenters from the Property Casualty Insurers Association of America (PCIAA) and the National Council on Compensation Insurance, Inc. (NCCI), discussed the Initiative and how it may impact the industrial insurance market in our state.

Click here to go to the Webinar Information Page.