Insurance fight goes to Senate

The war over Utah's Workers' Compensation Fund — the insurer of last resort for workers injured on the job — continues unabated, and now the fight goes to the full Senate.

On Friday, the Senate Revenue and Taxation Committee voted 4-0 in favor of SB165, which would, for all intents and purposes, privatize the fund but do it in such a way as to preserve its federal tax exemption and satisfy regulators in other states where WCF does business through a for-profit subsidiary.

"We have the planets aligned in many regards," said Sen. Greg Bell, R-Farmington. "It is a wonderful time to clarify once and for all the state's ownership. This will not happen again in your and my lifetimes."

SB165 is supported by a wide coalition of small and large businesses in Utah that want to see the fund operated as a private insurance carrier. But it is opposed by the governor's office, which says it does not give enough protection to Utah workers, and Utah's insurance industry, which says it gives an unfair competitive advantage to WCF.

The issue of state ownership is set to be resolved during a Feb. 23 trial wherein the courts could decide what ownership interest the state has, if any.

State Treasurer Ed Alter told the committee he is not opposed to privatizing WCF, but if lawmakers do so then the state is entitled to its full ownership interest.

WCF has offered the state $50 million for the state's interest in the fund, which made a $76 million profit last year. Alter places the value to the state at $250 million to $477 million, depending on how the state divests its interests.

The $50 million offer remains on the table, and Attorney General Mark Shurtleff is negotiating with the various parties on a settlement, said Sen. Curt Bramble, R-Provo and the bill's sponsor.

The fight over WCF began when an Idaho administrative law judge ruled that Advantage Insurance, a for-profit subsidiary of WCF that operates in other states, violated Idaho law because it was controlled directly or indirectly by a state government.

To keep the business in Idaho and other states — other states have similar laws — WCF and lawmakers set out to satisfy Idaho's concerns. SB165 would change the makeup of the board of directors to include some appointed by the state insurance commissioner and some appointed by policyholders.

Critical to the bill's passage is a ruling by the Internal Revenue Service that the changes would not jeopardize the fund's tax-exempt status, which keeps rates low and allows small businesses to participate.