The Workers'' Compensation Reinsurance Association (WCRA) board of directors has approved a surplus distribution of $310 million to Minnesota employers and insurance companies.
Including the current $310 million distribution, the WCRA has distributed surplus funds totaling $1.23 billion to Minnesota employers who purchase workers'' compensation insurance, self-insured employers and workers'' compensation insurance companies.
"Workers'' compensation insurance is a significant cost of doing business," said Jay Benanav, WCRA president. "These refunds help reduce those costs and make Minnesota a better place to do business. At the same time, the WCRA''s financial success continues to provide security for the state''s most seriously injured workers."
Minnesota law requires all providers of workers'' compensation insurance and all self-insured employers to purchase reinsurance coverage for large workplace injuries from the WCRA.
Approximately $108 million will be refunded to Minnesota employers and about $202 million to insurance companies. The distribution amounts are calculated in accordance with a 1993 law requiring a portion of surplus distributions to be made to qualifying employers as well as to insurance companies.
The surplus distribution must be approved by the commissioner of labor and industry and reviewed by the commissioner of commerce. "We have today filed the necessary documents with the commissioners seeking their regulatory approvals," Benanav said. "We will be ready to issue checks to employers and insurers as soon as possible after the regulatory process is completed."
Minnesota law requires all workers'' compensation insurers and all self-insured employers to purchase reinsurance coverage for large claims from the WCRA, a not-for-profit, tax-exempt association created by the legislature in 1979.
The refunds and distributions are made possible by excellent investment results, 1992 and 1995 changes in the workers'' compensation laws, and claims that are lower than anticipated. All three factors contributed to funds that are higher than necessary to pay for current and future claims.
The 1997 surplus distribution will be the fifth in recent years. In 1992 and 1993, the WCRA refunded $100 million and $302 million, respectively. Starting in July 1996, the WCRA applied $19 million in excess reserves against premiums paid by insurance companies and self-insured employers. In 1996, an additional distribution of $471 million was approved.
The WCRA has collected $963 million in premiums since 1979 and will retain about $1.1 billion to pay for an estimated $3.1 billion in current and future claims.
Including the most recent refund, the WCRA will have returned about $1.23 billion to reduce the costs of Minnesota''s workers'' compensation system. This is $264 million more in surplus distributions than the WCRA has collected in premiums. The surplus distributions have not jeopardized the WCRA''s ability to pay future claims.
"We have followed the same surplus distribution process that was approved by the federal courts following our 1996 distribution," said Benanav. "For that reason, we are optimistic that, once the commissioners finish their regulatory reviews, the process of issuing surplus distribution checks to our WCRA members and to more than 90,000 Minnesota employers will proceed smoothly."
by Melissa Martin