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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Captive Insurance Option for Oklahoma Workers Compensation Opt-Out Employers?

Opposite Directions
September 26, 2016

What is next for the 55 employers that provided workers compensation coverage under the Oklahoma opt-out statute that has since been declared unconstitutional in a 7–2 decision of the Oklahoma Supreme Court?

The opt-out statute provides that, if it is ruled unconstitutional, then workers compensation claims made under opt-out plans can be filed with the Oklahoma Workers' Compensation Commission, and the workers will get the same benefits as any other worker in Oklahoma. The legislation also provides that, if the law is overturned, then employers have 90 days to purchase traditional workers compensation coverage or self-insure.

A September 2016 Oklahoma Option revised report published by the Association for Responsible Alternatives to Workers' Compensation includes information in the table below that groups option employers by number of employees. A total employee count of all of the employers is not noted in the report. The report also contains a listing of the names of all of the employers that have chosen the WC option.

Number of OK Employees 50 or fewer 51–100  101–200 201–500 500+   Total
Number of Option Employers  17  9  5  12  12  55
Percentage of Option Employers  31  16  9  22  22  100

The collective option employers may want to discuss the advantages and cost savings that might be achieved from a self-insured deductible or forming and participating in a group captive. Admittedly, 90 days is not enough time to make this a reality without professional help and the support of the Oklahoma Department of Insurance Captive Division. With leadership among the opt-out employers, it could be a longer-term initiative that could provide cost savings while operating under the traditional workers compensation system.

Oklahoma had a captive count of 73 captive insurers at the end of 2015. There were 26 new captives licensed during 2015.

Jerry Messick, chief executive officer of Elevate Captives, described the current situation in Oklahoma in three words: "What a mess." He indicated he understood there was interest in "looking at modeling the Texas opt-out statute" to replace the current law.

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