October 25, 2014

New investigaiton sought of state workers’ comp pool (AUDIO)

The state’s biggest worker’s compensation insurance company is drawing scrutiny from state legislators who wonder if it should be sold. 

The legislature established Missouri Employer’s Mutual in 1993 when many small businesses could not afford workers comp insurance. and when competition was limited. The state put up five million dollars  to establish the company. The majority of its board is appointed by the governor. But it operates as an independent non-profit company and controls sixteen percent of the Missouri worker’s comp market. 

Senator Scott Rupp of St. Charles, who has sponsored the bill calling for the new committee, says MEM is a complicated business with a unique status as a government-formed independent agency.

Senator Jim Lembke’s special committee investigated the company last year. He says it’s a mutual company that has never behaved as one

MEM did not pay a dividend until this year–two million dollars.  Senator Eric Schmitt, who favors the sale of the company, says it has $163 million in reserves at a time when the industry standard is $39 million.  He says MEM has outlived its usefulness.

The senate wants a new committee to study whether MEM should be privatized and sold, and what the state’s asking price should be. It has asked to approve the committee’s formation, too.

memsale 41:24