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Politics Northwest

The Seattle Times political team explores national, state and local politics.

January 22, 2014 at 5:40 PM

Small, medium companies could self-insure under bill

Small and medium companies should have the same opportunities as big companies, including the option to self-insure against work-related illness and injury, said Sen. John Braun, R-Centralia,

Senate Bill 6179 would allow employers who require “substantially similar” services or activities of their employees to join with each other to form groups that would assume liability for workers compensation.

“It’s a very simple bill to allow small and medium businesses to form associations and do something we’ve done in our state for a long time,” Braun said.

Some state agencies and large private companies, such as Boeing, self-insure, which usually means setting aside a reserve of money to be used if an unexpected injury or illness occurs as opposed to paying premiums to an insurance company to cover the costs of claims.

The Senate Commerce and Labor committee on Wednesday held a hearing for the bill, which would allow small and medium companies, which typically pay a fixed amount for industrial insurance, to do the same.

Joe Kendo, legislative and policy director for Washington State Labor Council, told committee members the bill poses significant risk for smaller, less stable companies.

“As employers come in and out of the group, we’re afraid that increases the risk of insolvency,” he said.

Under the bill, the group is liable for “orders, findings, decisions or awards rendered against the participating member for the payment of compensation.” Members can voluntary cancel their participation in the group or for the group to eject a member, but they retain their liability for the time they participated. Kendo said this risks destabilization.

Vickie Kennedy of the Department of Labor and Industries, which regulates workers compensation and job safety, testified at the hearing but didn’t support or oppose the bill. She said the department doesn’t have the resources to manage large group insurers.

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