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What if Workers Purchased Their Own Comp Insurance?

April 5th, 2013

Your humble blogger invites you to take a break from the possibly useful posts you might find on this humblest of blogs, and to entertain a crackpot idea which Sacramento may want to consider the next time California goes through its Workers’ Compensation Reform dog and pony show.

Right now, your average employer in California either has to buy insurance or Self-Insure, either on its own or through a self-insured groupUnlike Texas and (maybe someday) Oklahoma, Californians aren’t too keen on the idea of allowing employers to opt-out.

California’s workers’ compensation system is a “no-fault” system (except for the employer – it’s your fault no matter what you do).  That means that Jack, your habitually hung-over, frequently clumsy, and obviously reckless employee inflates your policy by the same price as John, your careful, diligent, and experienced employee.

It doesn’t matter if Jack gets another injury every month as he trips over yet another object while walking-and-texting, and Jack has never been injured because he’s always bending with his knees and not his back, or focusing on what he’s doing instead of skipping through fantasy-land.  Jack would keep your experience modification high while John would reduce it, and you’d get your rate set every year.

What if John could buy his own workers’ compensation policy and not be included in yours?  What if his diligence, his lack of DUI convictions, and his many years of working without sustaining any sort of injury could get him a really cheap policy (not unlike an auto insurance policy)?  In fact, because John is saving you so much money, you could offer to split the difference with him, and then maybe he’d get to pocket some of the money as a reward for being so diligent.

Now, in industries where serious injuries are fairly common, like in construction and roofing, this plan might not work as the economies of scale would be your best bet for a lower price.  But what about the office-related industries?

Basically, by allowing a worker to purchase his or her own workers’ compensation policy, and allowing that workers’ employer to not cover them, we might create a system by which the really careful employees get to save the money that they are currently saving their employer or insurer.

Just another crackpot idea from your humble blogger… perhaps we could try it alongside the current system?

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