On April 7, 2008, CompSource Oklahoma celebrated its 75th birthday as Oklahoma’s assured market for workers’ compensation coverage. Those of us who help CompSource serve Oklahoma in meeting its mission are proud of our legacy, understanding the importance CompSource brings to the economic stability and success of our great state. The benefits have been many - some large, some small, all have contributed to Oklahoma’s rich history.
The idea of employers providing compensation benefits to workers for occupational injuries began to take hold in America as the Industrial Revolution swept across the country. Industrialization brought unprecedented growth, and with it came an increase in work-related injuries. Working conditions were harsh, pay was low, work weeks were long and safety measures were non-existent. Many workers were killed or severely injured. With little compensation beyond the paycheck and no government aid, the employee had few options if injured on the job. Many resorted to suing their employer in the common law courts - an expensive, time consuming process. Additionally, many employers were afraid of losing their business in a lawsuit. In 1911, the first “workmen’s” compensation law was introduced by the Wisconsin Legislature as a solution for handling occupational injuries. Viewed as a win for both employers and employees, it guaranteed benefits to the injured employee regardless of fault while barring the employee from the right to sue the employer in common law courts. Other states quickly followed Wisconsin’s lead. In 1915 the Oklahoma Legislature passed a bill authorizing employers to secure insurance to cover the costs of employee injuries.
Between 1915 and 1933, workers’ compensation coverage was provided primarily by private insurance carriers. But when the depression hit in the 1930s, it became increasingly difficult for employers to obtain coverage - especially in hazardous industries like oil drilling, coal mining and sawmill operations. Most private insurance companies were not willing to cover these operations.
As a solution to the lack of insurers willing to write coverage, Oklahoma’s Legislature created the State Insurance Fund on April 4, 1933. (Our name was changed to CompSource Oklahoma in 2001.) Then Governor, “Alfalfa Bill” Murray, signed the legislation into law on April 7, 1933. Start up funds of $25,000 were allocated but never used and were later returned to the state’s general fund. The idea of a state insurance fund as a guaranteed market to provide workers’ compensation benefits was not exclusive to Oklahoma. Six other states had already established state funds by 1916.
Oklahoma is a major producer of natural gas, oil and food. The state’s economy, one of the fastest growing in the nation, revolves around aviation, energy, telecommunications and biotechnology. CompSource meets an important challenge for this growing economy, providing workers’ compensation coverage to a diverse mix of more than 27,000 policyholders within a wide range of industries. Although a large percentage of our CompSource’s policyholders are Oklahoma’s small family owned businesses, we provide coverage to every kind of business from state agencies to telecommunications providers to the hometown grocer.
An integral part of CompSource’s mission is to provide coverage for any and all who need it, with the only requirement being premium payment for that coverage. We protect the employer with insurance coverage. We also protect the worker by ensuring they obtain quality medical care and appropriate compensation for time loss due to work-related injuries. This two-fold protection represents the basis on which workers’ compensation was initially established in the early 1900s.
Few of us have experienced what it was like in the early 1900s before worker’s compensation existed. Today, workers’ compensation is a protection many may give little thought to until it is needed. This protection has evolved over the years as changes have occurred to Title 85, Oklahoma’s workers’ compensation statutes. Since our birth in 1933, CompSource has continued to move forward, adapting to the many changes over the years and continuing to provide workers’ compensation benefits to Oklahoma employers.
When CompSource began providing coverage, it was primarily for state agencies and high-risk employers who were unable to obtain coverage elsewhere. Initially, most state agencies, municipalities and other governmental employers were required to insure with us. Today, some state agencies and municipalities may self insure through group associations while CompSource handles the claims and legal functions.
Originally placed under the jurisdiction of the State Industrial Commission, CompSource became a separate entity in 1937 directed by a three-member Board of Directors, which included the Governor, the Attorney General and the Secretary of the Board of Property and Casualty Rates. A Commissioner was appointed by the Governor to oversee operations.
At the end of its first year, CompSource had 800 policyholders and 22 employees. Over the next three decades, the policyholder count vacillated from as low as 330 in the 1940s to as high as 1,435 in 1962.
In 1975 efforts to gain control of certain assets of CompSource were declared unconstitutional as an impairment of the obligation of insurance contracts between CompSource Oklahoma and its policyholders. A Supreme Court decision reaffirmed the original intent of the 1933 legislation establishing CompSource as a nonprofit, self supporting entity and prohibited the use of CompSource reserves or other resources for any purposes other than those stipulated by the State Insurance Fund Act.
In the early 1970s, a national push was on to enact mandatory standards intended to improve the workers’ compensation system across the country. To avoid federal mandates, many states enacted stronger workers’ compensation laws. In 1978 Oklahoma implemented significant changes to Title 85, requiring ALL Oklahoma employers to obtain workers’ compensation insurance on their employees. Only three exceptions were allowed which included farms, agricultural, or horticulture businesses with payroll under $100,000; most private homes that employed domestic workers; and licensed, commissioned real estate associates or brokers. Two additional exceptions were added in 1986 which included truckers with no employees as owner/operators and federal employees. These changes resulted in significant growth for CompSource as we worked to meet the increased demand for services. By 1980 CompSource’s policy count had reached 8,574 with premium income at $56 million. As the workload climbed, so did the need for adequate building space. At this time, CompSource’s offices were divided between 410 and 1901 N. Walnut Ave.
By the late 1980s, CompSource’s premium income hit the million dollar mark and we opened a branch office in Tulsa to better serve our policyholder base in northeastern Oklahoma.
In 1990 the legislature passed numerous changes in workers’ compensation which included the creation of a nine member Advisory Council on Workers’ Compensation, the creation of an ombudsman program through the Workers’ Compensation Court and the addition of two more members to CompSource’s Board which brought it to the current Board count of nine.
Between 1990 and 2000, change became commonplace at CompSource as service became a large focus. A fraud unit was established to investigate and prosecute fraud. An electronic claims filing system and a Teleclaim hotline were implemented while the number of claims adjusters was increased to speed the claims handling process.
2001 brought more improvements as Deputy Commissioner, Terry McCullar, was appointed by the Board to replace retiring Commissioner Terry Tyree. Soon after, his title was changed to President and CEO. Under McCullar’s leadership CompSource has implemented many improvements aimed at providing more value to both policyholders and agents across the state. Since 2001 CompSource has seen:
- A much-needed name change,
- A new mission statement,
- An improved, stronger focus on customer service,
- Implementation of an agent commission plan that provides a viable market for Oklahoma agents to write coverage for their clients,
- Consolidation of CompSource’s Oklahoma City operations into one building for improved service,
- Implementation of a workers’ compensation Preferred Provider Organization (PPO) to save claims cost for policyholders, and
- Implementation of a Pharmacy Benefits Manager (PBM) to save on prescription drug costs.
All of this has been accomplished while keeping our surplus strong and our rates stable. We look forward to providing Oklahoma employers many more years of service as we continue our mission - “Partnering with all Oklahoma employers as the source for their workers’ compensation needs.”
