| CompSource is a worker's comp insurer of last resort that the state created in 1933. It has been able to keep rates lower than they otherwise would have been (keeping with the purpose of its founding -- providing affordable insurance for difficult-to-insure businesses). It is nonprofit and self-sustaining.
Numbers from the state Insurance Department back this up: CompSource has 35 percent of the market with remaining carriers all under 5 percent. This looks like a market in which CompSource has been able to exert downward pressure on premiums, but not so much that no one else will participate.
I've never understood how selling a state asset, be it a turnpike, museum or insurer, is going to improve competition. If you want to argue that the private sector is leaner and efficient, fine, although I don't believe that holds true in every case. But simply selling CompSource will reduce or not change the number of players in the market while removing a carrier of last resort that also happens to offer competitive rates. This amounts to little more than corporate welfare for out-of-state for-profit insurers.
Selling CompSource could add some money to state coffers (as much as $200 million by some estimates) but it will be costly to small businesses in the long run and will be a one-time stimulus. And if CompSource is mutualized instead of sold outright, proceeds will go to policyholders rather than the state.
It's also worth mentioning that any sale of CompSource is almost guaranteed to result in litigation, whose outcome is by no means assured.
Jason Reese, a Republican candidate for labor commissioner, cautioned against selling the provider.
"Let's not break our small businesses' budgets in an attempt to balance our state government budget," he said. "We must prevent privatizing profits while socializing losses -- creating a Fannie Mae for Oklahoma," he said.
Privatizing profits while socializing losses. Sounds familiar to me. |
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