North Dakota’s workers’ compensation board approved giving $77 million in dividends to most of its business customers over the next year, which could reduce their annual insurance bills by 62 percent.
The dividend is intended to shrink a Workforce Safety and Insurance (WSI) fund surplus that has been higher than state law allows, thanks to robust returns on the agency’s investment portfolio. Before June 19, the agency had authorized $176.4 million worth of dividends during the previous three years.
Mark Gjovig, who is chairman of the agency’s board of directors, said he believed WSI’s financial health could acccommodate the dividend payments and initiatives in the 2009 Legislature to increase benefits for injured workers.
The Legislature would have to endorse any benefit improvements. The WSI board and a legislative study committee have been exploring possibilities.
“We’ve got room to do both, and to do it well,” Gjovig said. “Hopefully in the next session we’ll do a lot more for the injured workers … I think we definitely have the money to do it, and we still would have some very competitive rates.”
The dividend will benefit more than 14,000 employers by reducing their insurance bills, the agency said.
Workforce Safety sells insurance to businesses to cover injuries in the workplace. The agency is North Dakota’s only provider of workers’ compensation coverage, and companies are required to buy it.
Separately, the board endorsed an outline of legislation that would specify how Workforce Safety and Insurance’s surplus is calculated. State law now limits the surplus to between 120 percent and 140 percent of the agency’s “actuarially established discounted reserve.”
The agency’s financial auditor, Brady Martz, said in its most recent annual audit of WSI that its surplus on June 30, 2007, was $174.4 million greater than what state law allowed.
Using the same calculation assumptions, Workforce Safety’s surplus this month would be $201.3 million greater than state law permitted.
However, the agency says its “extra” surplus is $77 million, not $201.3 million, and that the dividend it declared on June 19 should put it in compliance with the law.
Agency documents say items worth $124.3 million should be excluded from the figure, including $65 million in paper investment gains in WSI’s portfolio, $23.5 million for safety grants, and almost $15 million that is available in a school loan fund for injured workers.
Bruce Furness, Workforce Safety’s interim director, said legislators might want to define the surplus more precisely in state law “so that we can all agree on what the number is.”
Gjovig said he expects WSI’s investment portfolio, which is managed by the state Retirement and Investment Office, to continue to prosper.
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