- Report Published -
|Methods to Make Workers' Compensation Insurance Coverage More Affordable for Small Farmers|
|Workers' Compensation Commission; State Corporation Commission; Bureau of Insurance|
|SJR 223 (Regular Session, 2000)|
|The Workers' Compensation Commission (WCC) and the State Corporation Commission (SCC) were requested by the 2000 General Assembly, pursuant to Senate Joint Resolution No. 223, to study methods to make workers' compensation insurance coverage more affordable for small farmers. The study was requested because (i) small farmers are excluded from the scope of the Workers' Compensation Act if they employ fewer than three full-time employees, and (ii) while small farmers may voluntarily elect to be covered under the Act many are not able or willing to do so due to the high cost of such insurance. Furthermore, the study resolution noted that lowering the cost of the coverage for small farmers may increase the number of farmers who voluntarily obtain the coverage and that the voluntary procurement of such coverage would benefit both the small farmers and their workers.|
The WCC and the SCC were requested to determine the availability and cost of workers' compensation insurance and, to the extent possible, the extent to which small farmers currently voluntarily obtain workers' compensation insurance and the likelihood that reducing the cost of the coverage would materially increase voluntary procurement of the insurance. The Commissions were also asked to determine whether any legislative changes, such as providing subsidies, authorizing purchasing pools, or removing barriers to offering the coverage, would be cost-effective methods of increasing the number of small farmers providing workers' compensation insurance.
In order to comply with the study request, the State Corporation Commission's Bureau of Insurance (Bureau) obtained Virginia-specific information regarding the number of farms, average payrolls, and employment from the Federal Agriculture Census of 1997. Additional information was obtained regarding workers' compensation insurance availability and cost for the average small farmer in each of the major farming classifications. The Bureau attempted to get information from individual farmers but was unable to obtain mailing information due to privacy constraints.
The findings of this study indicate that workers' compensation insurance is available to all employers in Virginia regardless of the size or nature of the employer's operations. This is due to the existence of the Virginia Workers' Compensation Insurance Plan. Small farmers have access to this insurance through their usual insurance agents. Premiums for small farmers generally will not exceed $750 per year and may be lower, depending on the farming classification. Relatively few farmers currently purchase the coverage, as evidenced by the low number of minimum premium policies with farm classifications in the residual market. Authorization for the establishment of purchasing pools for small farmers currently exists under the Workers' Compensation Act. However, the financial requirements necessary to establish such pools may be perceived to be a barrier for small farmers. In addition, any rate subsidies provided to small farmers would result in an increase in workers' compensation rates for other types of employers. In light of the information on the current availability of workers' compensation insurance, and because of the difficulty in determining why farmers are not voluntarily purchasing workers' compensation coverage, neither the WCC nor the SCC is able to recommend making any changes to the current system.