Workers’ Compensation Insurance Coverage – Part 2

Workers’ Compensation Insurance Coverage – Part 2 Image

In a previous article, we discussed some details of Oklahoma’s Workers Compensation law. Here we continue with more information in Part 2 of the series. Oklahoma law gives employers three options for attaining workers’ compensation coverage, explained here:

1. Secure Coverage from a Private Insurance Carrier (They must be authorized to do business in the State of Oklahoma.)

Many companies are presently sanctioned to sell workers’ compensation insurance or a workers’ compensation insurance equivalent product in the State of Oklahoma.
Rate changes are suggested by the National Council for Compensation Insurance (NCCI), based on statistics collected from the majority of insurance companies in the state. Loss costs serve as a base to which individual companies apply an expense calculator specific to their firm.

2. Secure Coverage from CompSource Oklahoma or another provider
CompSource Oklahoma was established by the Oklahoma Legislature in 1933 as a separate entity to offer a reliable market for workers’ compensation insurance at the lowest possible price. CompSource functions as self-financing insurance company selling workers ’ compensation coverage to Oklahoma businesses either directly or through insurance agents that have signed an agency contract with CompSource.  A commission is paid to the agent on a sliding scale based on the loss experience of the employer who is applying for coverage. As an entity of the state government, CompSource is not subject to rate approval by the Property and Casualty Board and does not pay premium taxes. Instead, CompSource’s governing Board of Managers creates the rates.

3. Self-Insure against Workers’ Compensation liability

Oklahoma law states that if an employer delivers satisfactory proof of financial ability to pay compensation, that employer may be permitted to carry its own risk without insurance (self-insured). Endorsement to self-insure is granted by the Oklahoma Workers’ Compensation Court, after considering an application that determines whether or not an employer meets the necessary statutory and regulatory conditions. Those conditions, found in Rule 2 of the Rules of the Administrator of the Oklahoma Workers’ Compensation Court, are listed below:

  • Consistently engaged in business for no less than five years;
  • Average minimum payroll of no less than $1,000,000 in each of the three prior years;
  • Shareholders’ equity of no less than $500,000;
  • No less than 100 employees; and
  • Show financial capability to pay all workers’ compensation requirements.

Workers compensation is basically an agreement in which workers give up their right to sue their employers in court for any type of injury or accident, in return for an assurance that if and when they are injured on the job, they will get proper medical care and rehabilitation. Finding a balance between what is fair for workers and employers is tricky, and every state handles that challenge in their own way.