WEST VIRGINIA RECORD

CHARLESTON - When the National Council on Compensation Insurance signed up to help West Virginia convert from public to private workers compensation, the consulting firm spotted a problem right away.

Employers never had possessed written policies from the old West Virginia Workers Compensation Commission.

Dennis Kokulak, state relations executive for the council, said West Virginia employers received certificates rather than policies.

He said the state's new private insurer, BrickStreet Mutual, will issue policies explaining coverage, employer responsibilities, and rules for calculating premiums.

The council, with offices at Boca Raton, Fla., started working on the conversion last October. State insurance commissioner Jane Cline chose the council.

Kokulak said the council employs about 900 workers. He said it keeps statistics and sets rates for 38 states.

Although the state hired the council, he said, BrickStreet will pay for its services.

The council already had helped Nevada pull off the same kind of shift from public to private workers compensation.

Kokulak said, "A lot of the work that we are doing in West Virginia now, we did in Nevada over a longer period of time."

Nevada's legislature voted for conversion in 1994 or 1995, he said, but did not start the new system until 1999.

The new system immediately allowed all insurers to compete, he said.

In West Virginia, the conversion happened quickly. The Legislature passed a conversion bill in 2005, and set it to begin Jan. 1 of this year.

Instead of introducing full competition, however, West Virginia granted a monopoly for the first 30 months.

"It's two different approaches," he said. "I wouldn't say one is better than the other."

BrickStreet will face competition on July 1, 2008.

Kokulak said, "They have this two and a half year jump start and they will do everything they can to service their business."

He said the council has directed most of its attention to reclassification of West Virginia's work force.

The old commission placed workers in 92 categories. The new system provides more than 400 categories.

The old system grouped workers according to the nature of their employer's business, often lumping high risk employees with low risk employees.

Kokulak said the new system will allow standard exceptions, granting lower rates to low risk employees in high risk businesses.

He said, "That should be well received by West Virginia employers."

He said BrickStreet would set up a process to resolve classification disputes.

West Virginia Gov. Joe Manchin on June 13 proclaimed a 10 percent decrease in loss costs in the new system, but Kokulak injected a note of caution.

"That's for one year," he said. "We will keep looking at history and trends. We will see where it takes us going forward."

He said the council joined the insurance commissioner and BrickStreet on an eight-day tour of West Virginia in April. He said more than 2,000 employers turned out.

"We were very surprised and encouraged by employer response," he said. "These meetings generally lasted an entire morning."

He said, "Employers are being very well educated about the changes."

He said the council would carry on constant data analysis and continue working with BrickStreet and the insurance commissioner.

"There was a lot of discussion, a lot of detail, before we filed things like the workers comp policy," he said. "The process continues."