Montana Bill Seeking to Privatize $1.6B Workers’ Comp Insurance Fund Tabled

Montana lawmakers on Friday put off further discussion on dismantling and privatizing the state’s massive workers compensation system, saying the task was too daunting to take up in the waning days of the legislative session.

Instead, the matter will be studied more thoroughly in the months after the Legislature adjourns.

Getting rid of the $1.6 billion State Fund would be a major undertaking – not only in practical terms because of the thousands of businesses that would be affected but also politically.

While Montana Republicans, who control both chambers of the Legislature, have generally favored privatizing some aspects of big government, they appear split on what to do about the State Fund.

Republican Sen. Fred Moore of Miles City is sponsoring the bill on behalf of a small group of insurance companies that say doing away with the State Fund would increase competition and reduce workers compensation premiums.

But Senate Majority Leader Fred Thomas, a Republican from Stevensville, and Republican Rep. Greg Hertz of Polson scheduled a news conference after Friday’s committee hearing to express their opposition.

While opponents acknowledge that Montana has some of the country’s highest premiums, they worry that premiums would further rise for high-risk trades such as logging and trucking.

Republican Sen. Ed Buttrey of Great Falls, who chairs the committee tasked with studying the privatizing of the fund, said he and other committee members needed more time to see how doing so would affect Montana businesses.

The fund serves about 26,000 policy holders. Its largest client is the state of Montana. It also serves many small businesses that might not be able to find a new insurance carrier because they would carry too high a risk or would be too small to be of economic value to underwriters.

Several insurance companies currently compete with the State Fund to provide workers compensation insurance in Montana.

One of the companies, Victory Insurance, argued that privatization would lower overall premiums in the state.

But critics of the plan said there was no guarantee that smaller companies would see lower premiums. And companies involved in high-risk businesses could find themselves in pools that generally pay higher premiums.