Economics, Not Politics
Arizona Governor Jan Brewer has signed into law a bill passed last month by the State Legislature that will privatize Arizona’s workers compensation fund. The State Compensation Fund (“SCF”) was created in 1925 to provide workers compensation insurance for employers located in Arizona. It has operated as a nonprofit agency under the supervision of a board of directors appointed by the governor. But beginning January 1, 2013, SCF will be a mutual insurance company with ownership of all the Fund’s assets and liabilities. The Fund currently provides coverage to 40,000 Arizona businesses and with a market share of 31.5%, it is the state’s largest workers comp underwriter. Once privatized, the Fund will be subject to the same regulations as private insurers and will no longer be able to use the terms “state compensation fund” or “SCF” in its name, logo or other marketing materials. I welcome the privatization of state workers’ compensation funds, as it reduces the opportunities for political interference in the operation of these funds. With states experiencing serious budget deficits, the assets held by state funds and the premiums they collect present attractive targets for politicians desperate for funds. The state should get out of the workers compensation business and Arizona is leading the way.