RELIABLE Contractors claim that workers’ comp coverage is easier to handle because of SAIF.

The conflict has pitted the Associated General Contractors’ Oregon-Columbia chapter and other supporters of the fund against Liberty Northwest, a member of Liberty Mutual Group, Boston, one of the biggest writers of construction-related policies. Portland, Ore.-based Liberty Northwest wrote workers’ compensation insurance for state AGC members until the State Accident Insurance Fund (SAIF) replaced it 15 years ago. SAIF can discount rates partly because of a federal tax exemption. But Oregon voters will decide in November whether to sell SAIF’s assets and put it out of business.

Liberty Northwest, which was founded by former SAIF workers in 1983 and now has $110 million in premiums, about 12% of Oregon’s workers’ comp market, has chafed against SAIF for years.

Until 1989, SAIF operated as an insurer of last resort. But in 1990, after years of soaring workers’ comp premiums, legislators converted the fund to a public corporation. As the assigned risk pool roughly tripled to its present level of about 11,000 employers, SAIF focused on bigger companies with better practices.

SAIF says stability in workers’ comp rates that began in the 1990s is a sign of its success. The fund continues to insure many small employers whose premiums would go through the roof, or whose coverage would be otherwise unavailable. "We have a lot of 10-person firms that are high risk," says Jessica H. Adamson, state AGC chapter legislative affairs manager. "Without SAIF, they wouldn’t be able to get insurance."

Liberty Northwest says the decline in workers’ comp increases resulted from reforms enacted by state lawmakers that emphasized safety and cut litigation. Liberty Northwest CEO Tony Ferronato claims that SAIF’s federal tax exemption helps it to use "predatory pricing." The fund also pours money back into AGC and another local group, Associated Oregon Industries, he says. In 2004, SAIF will reimburse AGC $1.33 million for safety consulting, including use of vehicles and offices, according to AGC data.

WELL-CONNECTED Former Oregon Gov. Neil Goldschmidt’s consulting firm took in hefty fees from the State Accident Insurance Fund.

A series of embarrassing revelations about SAIF in the last year created an opening for Liberty Northwest, allowing the firm to seek enough petitions to place a ballot measure abolishing SAIF. A consulting firm owned by former Oregon Gov. Neil Goldschmidt collected nearly $1 million in consulting fees from SAIF from 1998 to 2003. The fund’s two top executives resigned in the past year amid questions about management practices.

AGC executives say SAIF’s management mistakes don’t justify its destruction and can be corrected through reforms. Liberty Northwest "has worked for years to get market share by wooing" politicians and more recently resorting to a petition drive, claims Adamson.

Oregonians for Accountability, which pushed the petition drive, has run ads lately accusing SAIF of abandoning small employers, accumulating big profits and inappropriately denying claims. Liberty Northwest is a founder and main source of funds for the group. SAIF’s supporters complained to state officials that the ads violated rules against deceptive advertising.

But the question is whether the private sector alone will offer Oregon workers and employers anything better than SAIF does now.

(Photos courtesy of AGC Oregon-Columbia Chapter)

nasty fight over whether to privatize Oregon’s state-assisted workers’ compensation fund has all the elements of a tooth-and-nail political campaign, including revelations of spending abuses and high-priced media blitzes.