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Montana lawmakers study options for workers comp system

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Montana lawmakers are considering options for the state’s workers compensation system, including dissolving it or turning it into a private entity.

The state currently has a three-way competitive system in place. Employers can insure with private insurance companies or the Montana State Fund, or they can self-ensure.

The Montana State Fund is an independent public corporation that serves as an alternative to the private sector, according to Laurence Hubbard, Helena, Montana-based CEO of the Montana State Fund.

The Montana State Fund holds close to $1.4 billion in assets.

“The primary issue surrounding all of this is, whose assets are they? Do they belong to the policyholders or Montana State Fund exclusively, or does the state have the right to transfer assets or to take assets as they deem appropriate? I think that is going to drive a lot of future discussion about what to do with the structure of Montana State Fund,” said Mr. Hubbard in an interview with Business Insurance.

Lawmakers are also discussing how these options will affect workers comp rates, according to Mr. Hubbard.

“If they eliminate the Montana State Fund — that is, a nonprofit corporation — rates will go up for most small businesses in Montana,” said Mr. Hubbard. “Of concern to me is the long-term financial strength of the Montana State Fund in the future. If the legislature can freely come in any time they want and scoop off assets, that does not bode well for the health of our workers compensation system.”

Lawmakers are expected to address these issues at the Economic Affairs Interim Committee meeting in April.