A Maine Workers’ Comp Milestone

This year marks the 20th anniversary of the reform of Maine’s once-notorious workers’ compensation system. This landmark legislation was a hard-fought and hard-won victory for both workers and employers. The reform has been characterized as “under-promising and over-delivering.” That’s an understatement in itself. How bad was it?

The old system had become an engine of litigation, endless conflict and high costs making Maine the most expensive state in the nation for this mandatory insurance coverage.

Workers’ compensation insurance was originally designed to protect employers from being sued for work-related injuries as well as to protect workers’ by paying lost wages and medical expenses for injuries that occurred as a result of their employment. With those protections, however, some employers saw their workers as disposable and never addressed the underlying causes of accidents. Some industries, such as logging, considered injuries and death part of the job in a business that was inherently dangerous – or so they thought.

On the other side, some litigation attorneys helped build a system that favored prolonged disputes making it difficult to settle cases or to get injured workers back on the job. By changing the law bit by bit over the years, onerous procedural hurdles made it more attractive to settle cases at a high cost rather than to contest their validity.

The upshot was that the system no longer worked for the people it was intended to serve and made Maine an unattractive place to do business.

Thanks to the work of a balanced blue ribbon commission,legislative compromises and the leadership of former Governor John McKernan,the system was reformed. Key to that success was the formation of Maine Employers’ Mutual Insurance Company (MEMIC) that serves as the guaranteed market for any employer seeking this mandatory coverage. Governed by an employer-led board of directors, the company emphasized workplace safety. Once Maine had a guaranteed market, other insurance companies recognized the potential to write coverage without losing money. The result of sound safety practices, procedural reforms and competition has been a drop of nearly 40% in the cost of workers’ compensation insurance. Market forces are working as they were intended.

But more important has been the change in Maine’s places of work. Safety practices have vastly improved working conditions. The number of injuries resulting in time lost from work has dropped by 30% and the notorious logging industry has made fatalities a rarity through training and mechanization.

The importance of safety, however, must remain foremost in the minds and practices of all employers and employees. That is one reason why Clark Insurance has an on-staff safety consultant who helps identify risks of injuries and accidents.

If you want to experience the difference Clark Insuranceoffers for workers’ compensation and other lines of insurance, contact us.