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1 J. Ins. Regul. 1 (1982)

handle is hein.journals/jloins1 and id is 1 raw text is: POINT COMPETITIVE RATING AND WORKERS' COMPENSATION by William 0. Bailey People who favor regulatory reform occupy all parts of the political spec- trum. Those on the left consider traditional regulation to be more protective of the interests of the industry being regulated than of the public interest. To them, regulatory reform means stronger command and control power. Those on the right consider regulation to be hostile to the industry being regulated, imposing unnecessary costs that must be passed on to consu- mers while preventing timely response to changing public needs. To them, regulatory reform means deregulation. One of the ironies in the debate about extending competitive rating to workers' compensation is that traditionalists appear to have adopted some of the attitudes of the left-that this part of the insurance business must be closely regulated if the public interest is to be served. The progressives, for their part, have adopted some of the attitudes of the right-that excessive regulation can obstruct the public interest. There are other ironies. For example, when the National Association of Insurance Commissioners (NAIC) adopted its model competitive rating bill in 1980 addressing all voluntary property/casualty insurance lines, the most controversial provision of the model act was its inclusion of workers' com- pensation. However, since then, with the exception of Kentucky, which enacted a comprehensive competitive rating act, all recently enacted com- petitive rating laws have been directed solely at workers' compensation insurance. The final irony is the dispute itself. A large majority of companies within the property/casualty insurance industry supports the concept of allowing competitive market forces to regulate premium rates, but there is a significant split when that concept is extended to workers' compensation. Those who oppose competitive rating for workers' compensation fear a variety of adverse results: erosion of the industry-wide data base relied on by regulators and carriers alike, the inability of regulators to regulate and of small carriers to compete, a decline in loss control efforts, lessened interest in the small business market, unstable premium rates and increased poten- tial for insolvencies. Those who support greater price competition for workers' compensation are confident that such problems as might arise are readily solvable in a properly structured program. Further, they are con- vinced that competition will assure fair but adequate rates, greater availabil- ity of coverage by promoting more stable earnings, improved response to 1