Insurance Commissioner Jim Donelon has vivid memories of the awful market for workers’ comp insurance in Louisiana nearly 30 years ago. With few insurers writing coverage and premium rates sky high, many mainstream Louisiana businesses paid dearly to protect thousands of people in the workplace, he says.
“When I got elected to the Legislature in the 1980s, workers’ comp was far and away the biggest insurance crisis in our state,” says Donelon, who served 19 years as a state lawmaker before becoming insurance commissioner.
As Business Report details in a feature from the current issue, the picture is much different today. About 125 entities now write workers’ comp coverage in the state—a record number for Louisiana, according to Donelon. Meanwhile, premium rates have declined by nearly 60% during the past 20 years.
“We have a very competitive market,” he says.
All of which helps explain a move now underway by LCTA Workers’ Comp, currently the state’s largest self-insured fund.
Self-insuring is a method of managing workplace risk by creating a pool of money from which to pay claims by workers who get injured on the job. For businesses that are not prone to frequent or serious work-related claims, self-insurance can be more cost effective than purchasing insurance from a third party.
But self-insurance also carries certain risks and limitations that can make it tough for a fund to expand geographically or to broaden its reach to include larger clients.
“That’s why we’re moving to a mutual holding structure,” says LCTA Executive Director Troy Prevot.
Though its conversion process is in a preliminary stage, Prevot says LCTA could be operating as a stock insurance company—essentially a regular insurance carrier—by early 2016.
He says the organization is taking its time in laying out a growth strategy for its post-conversion existence, but the board of directors hopes to expand LCTA’s mission of providing workers’ comp by reaching into other states. The organization also aims to compete for the business of groups it was previously not allowed to deal with as a self-insured fund, including municipal entities such as school boards and police juries.
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