Editorial: Workers’ Comp

Coming changes hold key to state’s economic future

The Register-Herald, September 24, 2005

As 2006 draws closer, so comes a major change in how West Virginia businesses will pay workers’ compensation premiums.

The privatizing of the workers’ comp program will go into effect on Jan. 1 and there is plenty of tension in the business community, especially among small business owners, about how they are going to deal with having to pay premiums under the new structure.

We all know about the muddy past of workers’ comp in West Virginia. Of all things, it is probably what we should be the most embarrassed about, given the multitude of abuses that have occurred over several decades.

When Gov. Joe Manchin took office, he immediately went to work on the workers’ comp snafus. Much progress has been made and the Legislature has responded. Work on a solution is moving in the right direction; however, with a $3 billion dollar unfunded liability deficit, which by the way is close to equaling the state’s entire current fiscal year budget, much still needs to be done.

Yes, the severance tax which will be endured by the coal, timber and oil and gas producers in the state will produce approximately $230 million a year to help pay down that debt.

But what about the financial strain that is going to be placed on businesses that will have to pony up premiums on an annual basis rather than the quarterly structure they have been used to under the broken system?

The plan does initially allow for six-month premiums to be paid in one installment or two (Jan. 31 and March 31). But beginning on July 1, 2006, full policies will begin to be issued under staggered payment terms with all policy renewals being issued for 12-month terms on July 1, 2007.

Obviously it’s difficult for both parties involved, the businesses and the Brick Street Mutual Insurance Co. (that will administer the program initially). But many business owners are saying it could break them financially.

On Friday, workers’ comp executive director Greg Burton said that at the present time, 94 percent of West Virginia businesses are current on paying comp premiums. We hope that once the new system is put into effect that number doesn’t start to decline. West Virginia needs a workable comp program to continue developing our economy; the future of our state depends on it.