A Further Analysis of the Wyoming Workers Compensation System

One of the areas that Wyoming will need to examine is how Workers Comp claims are handled - specifically if claims that should be accepted are instead denied. This is one of the lingering questions about the North Dakota Workers Compensation system. Is there a trend to over-deny claims as the adjusters in North Dakota and Wyoming know that the Workers Comp system is one-sided?

A high-quality full claims audit from an outside source would enable Wyoming to find out if they are being fair to their injured employees. The word "independent" is crucial. The audit would have to be superior to the one in North Dakota.

From the Casper Star Tribune:

• A recent assessment of workers comp's finances by Pacific Actuarial Consulting suggested that about $642 million is required to cover benefits and liabilities based on historic and current income and payouts. It also suggested a more conservative view may call for $848.7 million, which would cover a major catastrophic scenario.
• As of Jan. 31, workers comp's cash balance was $925,296,141, according to outgoing director Gary Child. So whether the surplus is in the neighborhood of $77 million or $283 million, advocates from both the employee and employer viewpoints say they want a more detailed analysis of the finances.

I do not ever, and will never accept, an analysis from anyone in an insurance position that uses the word or words "worst-case scenario". Therefore, the analysis by Pacific Actuarial Consulting that 848.7 is needed for a catastrophe is not valid. However, I have not reviewed their findings. The $642 million seems high, but is probably more in line with actual needs of the Wyoming Workers' Compensation System. Producing a LDF (Loss Development Factor) should be sufficient for the projected needs.

One of the great things about the Wyoming Workers Compensation system is that attorneys, legislators, administrators, and others are asking questions.

Next Up - The Difference Between Premium and Reserve Audits - they are very different.