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State Funds: Their Role in Workers' Compensation

 

Leadership from State Funds

Because of their unique position in the industry, state funds are recognized nationally as workers' compensation leaders. They are staffed with specialists whose in-depth knowledge and expertise have produced many significant advances and innovations in the workers' compensation field.

State fund employees concentrate their knowledge, research, and abilities to a single line of insurance, which makes them leaders in workers' compensation. Many state funds are required to license their marketing representatives with state insurance departments. A substantial number of Chartered Property and Casualty Underwriters and Certified Safety Specialists are employed by state funds.

Pioneers
State funds have been pioneers in many areas, including rehabilitation and effective delivery systems. The Canadian funds are often cited for excellence and leadership in rehabilitation and treatment of permanent partial disabilities. The Washington fund is a recognized leader in the practice of the total rehabilitation concept.

State funds are totally involved with physical restoration, vocational evaluation, counseling, and job placement services. Their efforts return injured employees to the work force, keeping them as viable earners and tax-paying citizens who are assets to their states.

Current technology is employed in adjusting and handling claims. Many funds use sophisticated computer-based systems for maximum efficiency and service to employers and in delivering benefits. All funds have produced managerial innovations to aid their employers within the criteria established by the laws of their jurisdictions. These creative solutions to problems demonstrate the positive effect of a carrier that specializes in workers' compensation.

All of the knowledge and information generated by state funds is available to other funds. Their organization, known as the American Association of State Compensation Insurance Funds meets to distribute and share information, techniques, ideas, and knowledge. This collaboration aids them in the perfection of their handling of problems in the system.

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Yardstick for measuring cost
State funds also serve as a yardstick for measuring the cost of workers' compensation insurance against which other insurers' performance can be measured. This factor played a significant role in the legislative decisions to establish the newest funds in Missouri, Kentucky, and Hawaii. State funds' history of a low expense ratio and control of net premium cost for employers was a determining influence.

Existing state funds around the country serve as an available resource for states seeking to have a positive effect on their economy and offer solutions to workers' compensation problems. The eight state funds created in the early 1990s quickly became the market leaders in their respective states while effectively depopulating their assigned risk pools of those small-premium-size employers that the private sector was not willing to service.

State funds have traditionally set standards of performance for reducing net premium costs through rate discounts and dividends. Some state funds have further reduced costs through institution of downward deviations from standard rates for premium by significant amounts. Such low costs and service afforded by the nonprofit state funds over the long haul have been and remain positive influences, as well as directly delivering a good insurance value in their respective jurisdictions.

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States realize a benefit by having a state fund
Revenue generated by their funds through premium, benefits, salaries, and operational expenses remain in the state. Fund investments can also boost the state's economy. Some state funds invest reserves in home and commercial mortgages, or in savings in time deposits in state banks. Lower workers' compensation costs to employers is a benefit to a state's economy.

State funds continue to fulfill the mission for which they were created: to provide readily available workers' compensation insurance and benefits to the employer and the worker at the lowest possible cost, and to return the injured worker to full employment at the earliest possible opportunity.

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State Funds: Their Role in Workers' Comp
History
State Funds Emerge
Types
Advantages
Operations
Leadership

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