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Arizona to privatize state workers comp fund

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PHOENIX—Arizona Gov. Jan Brewer has signed legislation that will privatize the state's workers compensation fund.

The bill, which passed the Arizona Legislature last month, will privatize the Arizona State Compensation Fund as a mutual insurance company by January 2013. The fund provides workers compensation coverage to 40,000 Arizona businesses and is the largest workers comp insurer in the state.

Arizona Senate President Bob Burns, R-Peoria, sponsored S.B. 1045, which passed the state House 37-19 and the Senate 26-1. Gov. Brewer signed the measure May 7.

Lawmakers moved to privatize the Arizona SCF to remove state expenditures and Sen. Burns told reporters it was the “right time” for it to go private. By privatizing Arizona SCF, it can offer stabilized rates as well offer workers compensation coverage nationally.

Kelly Campbell, vp of the Property Casualty Insurers Assn. of America, said the bill “laid the groundwork” for privatizing the fund and more work lies ahead to get that completed.

Further, she said the fund will be on an equal footing with other workers comp insurers as it will be subject to the same regulations and obligations as private insurers.

According to the Arizona Department of Insurance, Arizona SCF reported $191.8 million in direct written premiums and had 31.5% of the state's workers comp market last year.

The fund has four subsidiaries that also write workers comp insurance, including SCF Premier Insurance Co., which wrote $34.1 million in direct premiums in 2009, and SCF Western Insurance Co., which wrote $10.7 million in direct premiums, according to the Arizona Department of Insurance.